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Markets in turmoil

ahead of Spanish
budget update
RBS traders
boasted of
Libor fixing
TRADERS at RBS exchanged
messages joking about their ability
to manipulate Libor by entering
false interest rates, according to
court documents filed last week in
Singapore, it emerged yesterday.
Instant messages show trader
Tan Chi Min telling colleagues the
banks submissions changed the
rate and so global interest rates.
A message from April 2008 read:
Nice Libor. Our six-month fixing
moved the entire fixing, hahahah.
Libor is a key interbank lending
rate which banks use as a
benchmark and to judge the state
of funding markets. Banks give
estimates of interest rates to the
British Bankers Association, which
compiles the number daily.
The messages emerged because
Tan was sacked last year for
allegedly fiddling the Libor
submission, and is suing RBS for
wrongful dismissal.
The documents were seen by
Bloomberg before Singapores high
court sealed them as the papers
could prejudice other inquiries.
Tan denies any wrongdoing,
arguing the bank approved the
practice at the time.
Other messages show
conversations between then-head of
yen products Jezri Mohideen, who
denies wrongdoing, and Neil
Danziger who has since been fired.
Mohideen is reported to have
asked Whats the call on Libor, to
which Danziger replied Where
would you like it, Libor that is.
Another trader said: Mixed
feelings, but mostly Id like it all
lower so the world starts to make a
little sense.
An RBS spokesman said: Our
investigations into submissions,
communications and procedures
relating to the setting
of Libor and other
interest rates
are ongoing.
RBS and its
continue to
fully with
Down 3.9%
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CAC 40
Down 2.8%
FTSE 100
Down 1.6%
Down 0.33%
down 1%
to $109
a barrel
THE EUROZONE came crashing back
down to reality yesterday, as riots in
Greece and worries over Spain saw
markets turn red.
In Athens a general strike organised
by trade unions was splintered by out-
bursts of violence between police and
clusters of troublemakers among the
Molotov cocktails and other missiles
were hurled at the police, who wielded
batons and broke an earlier instruc-
tion to avoid firing tear gas at the gath-
ered crowds.
And last night anti-austerity protests
in Madrid also saw flashes of violence,
with police firing rubber bullets. The
states 2013 budget is published today.
Stock markets throughout Europe
and elsewhere in the world nose-
dived yesterday, particularly in crisis-
struck Eurozone states. The leading
indices in Spain and Italy lost 3.9 per
cent and 3.3 per cent respectively.
And Spanish borrowing costs soared,
with the yield on 10-year bonds jump-
ing above the psychologically impor-
tant six per cent mark, rising nearly 32
basis points to 6.06 per cent.
In Europe its another day, another
riot, commented IGs David Madden,
while Michael Hewson of CMC
Markets added: Images of tear gas and
rioting protestors on TV screens dont
generally engender confidence in
investors that EU leaders have control
of the situation in Europe.
Prior to the spike in Spanish yields,
Prime Minister Mariano Rajoy told the
Wall Street Journal that his govern-
ment would extend its hand to inter-
national lenders if borrowing costs
were too high for too long. Under
such circumstances, I can assure you
100 per cent that I would ask for this
bailout, Rajoy insisted. FREE
The euro areas prospects have dark-
ened in recent days among uncertain-
ty over whether, or when, Spain will
apply for a bailout.
The uncertainty is seen as a block on
the ability of the European Central
Bank (ECB) to activate its bond-buying
programme and reduce borrowing
With Spain still burdened by a bank-
ing and housing crisis, there are also
worries over splits in Europes com-
mitment for a banking union that
would pave the way for recapitalisa-
tion of troubled lenders.
Spains plight was highlighted in an
updated statement from its central
bank yesterday, which cut its forecast
for 2013 to a still-optimistic prediction
of 0.4 per cent growth.
And this morning economists at
Ernst & Young have hit out at Eurozone
leaders and slashed their own forecast
for the single currency area.
The broader policy response to the
crisis has still fallen short of the
game-changer needed to restore long-
term stability, the report says, fore-
casting virtually flat growth of just
0.1 per cent through next year, after a
0.5 per cent contraction this year.
Meanwhile, credit rating agency
Moodys yesterday reduced its outlook
on the EUs triple-A rating to negative,
from stable, due to sharp economic
slowdown in the regions largest core
One of those economies, France, is
being weighed down by more than
three million unemployed citizens,
official data revealed yesterday.
The French jobless total edged up to
3.011m last month, the first time
since 1999 that it has passed the three
million mark.
And consumer confidence in France
fell for a third consecutive month in
September, separate data released by
the Insee stats office revealed.
In fellow Eurozone state Italy retail
sales fell for the fourth month run-
ning in July. Sales were down 3.2 per
cent on a year earlier.
FTSE 100 n5,768.09 -91.62 DOW n13,413.51 -44.04 NASDAQn3,093.70 -24.03 /$ 1.62 unc / 1.25 unc /$ 1.29 unc
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Jezri Mohideen
denies any
Spanish 10-year yields
Follow me on Twitter: @allisterheath
G4SS board will meet today to
discuss the conclusions of a
comprehensive review into the
Olympic security scandal, with the
future of chief operating officer
David Taylor-Smith, as well as
others, in the balance.
His sacrifice would be seen as a
move to protect the security firms
chief executive Nick Buckles, who
has come under heavy criticism for
his stewardship of G4S as it failed to
fulfil its contract for the Games.
Taylor-Smith, who has been at
the firm since 1998, is likely to be
sacked, Sky reported yesterday.
G4S stands to lose at least 50m
from the contract, and Buckles has
repeatedly vowed to cling on to the
57m management fee, despite the
Home Affairs Select Committee
demanding the company gives it up.
PwC has conducted the review
into the failure on
behalf of G4S,
thousands of
soldiers were
drafted in to
make up for
the shortfall in
staff. Taylor-
Smith started at
G4S in 1998.
G4S bosses to
decide if heads
will roll today
Banking industry calls for
tough Libor punishments
BANKERS who manipulate key inter-
est rate Libor should face tougher
personal fines in future, according
to the industry body that oversees
the benchmark rate.
A leaked letter written by British
Bankers Association (BBA) boss
Anthony Browne urges top regulator
Martin Wheatley to ban rate-fixers
from working in the industry again,
and to name and shame those who
have broken the rules.
However, the letter also revealed
not every bank agreed with the pro-
posals hence the need for the BBA
to push for regulatory action, rather
than relying on improved internal
controls and sanctions internally at
The leak comes a day after the BBA
revealed it is ready to give up control
of Libor the interbank lending rate
which the industry uses as both a
benchmark level and as an indicator
of how good or bad credit conditions
The rate was established in the
1980s, and is compiled by 16 banks
submitting estimates of their lend-
ing rates to the BBA every day.
But it came into disrepute when it
emerged some bank staff were delib-
erately entering false estimates to
manipulate the rate.
Martin Wheatley will reveal the
LOral chief hits out at income tax
France will find it almost impossible to
hire top talent if the government goes
ahead with plans to impose a 75 per cent
marginal income tax rate, the head of
LOral, one of the countrys biggest
companies by market value, has said.
Jean-Paul Agon, chairman and chief
executive of the worlds largest cosmetics
company, told the Financial Times: If
there is such a new tax rule, its going to
be very, very difficult to attract talent to
work in France, almost impossible at a
certain level, of course.
Wind power leader EU passes 100GW
The EU has cemented its title as the world
champion of wind power by passing the
milestone of 100 gigawatts of generating
capacity installed. The turbines can now
pump out as much electricity as 39
nuclear power plants
EU revenues up 600bn with cloud
Cloud computing could boost economic
growth across Europe to the tune of
600bn (478bn) and create millions of
new jobs, a European Commission
strategy document will say on Thursday.
Rivals fight to take shirts off JJB rack
Rescue talks over JJB Sports stalled last
night amid a tug-of-war between adidas
and Sports Direct over stock. Adidas,
which was helping to prop up JJB, wants
close to face value for its goods.
Bid process on line for Essex service
The train franchise bidding process is
about to undergo another stern test as
bids go in today to run the popular
commuter service between Southend and
Fenchurch Street in the heart of the City.
Kingfisher boss in talks with airlines
Vijay Mallya has sought to dampen
speculation that he is desperate for cash
to prop up his ailing Kingfisher Airlines,
claiming he is in discussion with several
foreign carriers over a potential stake sale.
Riverford enjoys organic growth
Riverford, the home delivery company, has
defied the organic food markets decline
to more than double its profits. The
business said pre-tax profits rose from
508,000 to 1.23m in the year to April.
Romney tempers tax plans
Republican presidential candidate Mitt
Romney, seeking to emphasize his deficit-
cutting ambitions, is warning Americans
that his tax-cut plan might not decrease
their tax bills as much as they expect.
Starbucks aims to invade Nordics
After decades of virtually ignoring the
highest coffee consumption market in the
world, Starbucks Europe chief is looking
to give a substantial jolt to the giant's tiny
presence in the pricey Nordic region.
NICK Clegg said yesterday that
there can be no question of
reducing the top rate of income tax
below 45p.
The Deputy Prime Minister told
the Lib Dem party conference that
he had only conceded reducing
the burden on higher rate
taxpayers from 50p in return for an
increase to the tax-free personal
allowance for all workers.
All future cuts in personal
taxation must pass one clear test:
do they help people on low and
middle incomes get by and get on?
Its as simple as that, he said.
Our position is clear. If we have
to ask people to take less out or pay
more in, we'll start with the richest
and work our way down, not the
other way around.
Clegg went on to add that the Lib
Dems future is not as the third
party, but as one of three parties of
government. As a result it must
confront the inconvenient truths
oppositions choose to ignore, such
as the need to reduce welfare
payments by removing universal
benefits from wealthy patients.
Yesterday it was announced that
the partys 2015 general election
campaign will be chaired by former
leader Paddy Ashdown. The party
has already accepted that further
spending cuts will need to be made
in the 2015/16 financial year.
Clegg will block
lower tax rates
for high earners
Anthony Browne said not all banks want tougher rules, and so the regulator needs to step in
To contact the newsdesk email
UROPEAN markets follow a well-
trodden path. A bailout plan is
announced, sending investors
into a frenzy of happiness;
nothing much happens; data is
published showing one or more
countries in even greater crisis than
before; everybody panics; equity
markets plunge and bond yields
jump; another bailout pledge is
made. And so on.
We are now at the peak of another
cycle: Spains economy is continuing
to shrink and the markets are waiting
for Mariano Rajoy, the Prime Minister,
to make his official bond-buying
request to the Eurozone authorities.
Spains central government budget
deficit reached 4.77 per cent of annu-
al GDP at the end of last month (even
though the year is far from over) and
the authorities are desperately trying
to retain some credibility with the
Troubled Britain should not mock the Eurozones nightmare
European authorities (and in time,
possibly with the IMF).
Spains other problem is that it is
moving perilously close to a full-scale
break-up, which would make it the
first country to be affected in such a
drastic, devastating way by the reces-
sion. There will be elections in
Catalonia on 25 November, following
elections in the Basque Country and
Galicia on 21 October. But the real
flashpoint is Catalonia, which
accounts for a fifth of Spanish GDP:
the local leader has pledged to call a
referendum on independence,
regardless of whether he is autho-
rised to do so by Madrid. Yet when
they are not threatening to quit
Spain, the regions are begging for
bailouts, further contributing to the
central governments woes: Andalusia
is about to ask for 4.9bn. Together
with handouts to Catalonia,
Comunidad Valenciana and Murcia,
four-fifths of Spains regional bailout
funds will already be used up (even
though there are 17 such
Comunidades Autnomas).
The situation is catastrophic for the
government, and that is even before
anybody works out the full scale of
bad debts in the system. The more the
economy shrinks, the more loans go
bad and these have already reached
169bn in July, 9.86 per cent of total
loans, from 9.42 per cent in June. Real
just how hubristic the British have
become: the only reason the UK is not
facing Armageddon is because the
Bank of England (one part of the
British state) is buying all of the gilts
issued by the Debt Management
Office (another part of the state) to
finance public spending. Coalition
ministers should stop gloating and
opposition spokespeople should stop
being so deluded. At least the UK is
not facing break-up if anything, the
recession (and the felling of Royal
Bank of Scotland and the old Halifax-
Bank of Scotland (HBOS)) has reduced
the chances of Scottish independ-
ence. We are lucky we didnt join the
single currency but the last thing
we should be doing is gloating about
the Eurozones crisis.
numbers could be even greater.
Wherever one looks, the Eurozone is
in disarray. Cyprus is in trouble again.
Greece is no better. The French are
busy trying to commit economic sui-
cide: President Francois Hollandes
admission that drastic austerity is
required was correct, even though it
means that he has committed a U-
turn of proportions that would make
even Nick Clegg blush. As so often,
however, it is the wrong kind of aus-
terity: economically destructive tax
hikes, including a mad 75 per cent
top rate and many other absurdities,
rather than a plan focused around
measures to reduce the size of the
state and supply-side reform.
There is an irony here, of course:
some of the Eurozone countries that
are nearly bankrupt could yet end up
with budget deficits as a share of GDP
that are lower than Britains. It shows
findings of his investigation into Libor
tomorrow, and is widely expected to
demand it be based on real transac-
tions rather than estimates.
That also means fewer currencies
and fewer time periods will be part of
the process in some markets at the
height of the financial crisis there
were simply too few transactions being
conducted to even attempt to base the
Libor submission on real data.
However, Anthony Browne is
adamant that Libor should not be abol-
ished entirely in the wake of the scan-
The needs of users of the rate are
very important, he wrote in the letter
which was leaked to Sky News yester-
We understand that there is a long
tail of existing contracts stretching
into the future which use BBA Libor as
reference rates.
As a result, he also calls on Wheatley
to ensure any streamlining or replace-
ment of Libor is carried out over a
long timetable to allow users to pre-
pare for the change of interest rate
David Taylor-Smith,
chief operating officer THE DEBATE: Page 19
The new jobs website for London professionals
THE AMERICAN greetings card giant
that saved Clinton Cards when the
company plunged into administra-
tion this year has received a bid from
a consortium led by its chief executive
to take it private.
American Greetings, which makes
and supplies cards for retailers, said
yesterday that brothers Zev and
Jeffrey Weiss, the firms chief execu-
tive and chief operating officer, had
tabled an offer valuing the company
at $580m (359m). A successful deal
would take American Greetings back
into Weiss family hands after more
than 50 years as a public company.
The company said the board will
form a committee of independent
directors to consider the bid of $17.18
per share. News of the offer moved
American Greetings shares up 17 per
Clinton Cards US
owner could go
private after bid
cent yesterday from their $14.34 price
before the bid was announced.
Clintons, was one of the US firms
biggest customers before it went into
administration in May. American
Greetings swooped in in June to save
around 400 stores around half the
total outlets and unveiled a new
image, including a name change to
Clintons, under the control of
Schurman Retail Group. Clintons said
the retailers turnaround would be
unaffected by the takeover.
American Greetings was founded by
the Weisses ancestor Jacob Sapirstein
in 1906 and went public in 1958. Zev
became chief executive in 2003 when
his father Morry who remains chair-
man stepped down. After careful
consideration, we have concluded that
the best course of action is for
American Greetings to return to its
roots, Zev Weiss said.
Brussels accused of ignoring
its regulator on hedging rules
BRITAIN and Germany have hit out
at the European Commission (EC)
for ignoring expert advice on new
short-selling and hedging rules and
failing to give any reasons why,
papers published yesterday revealed.
Four other countries joined them
in objecting to the EC brushing
aside recommendations from the
European Securities and Markets
Authority (ESMA), the EUs financial
regulatory body.
But only the UK and Germany
voted against the proposals, well
short of the number needed to
block the Commissions plans.
ESMA advice is compiled
through a transparent and
thorough consultation process, and
provides expert understanding
from Europes supervisory
authorities the countries said.
While we recognise the EC is not
obliged to follow ESMA advice, the
credibility of the process must be
ensured. We therefore request the
EC adopts a more open and
consultative approach in future.
But the UK and Germany went
further, singling out measures they
feel have been changed for the worse
like those limiting how credit
default swaps (CDS), insurance
against a firm or government failing
to pay its debts, are used.
We regret especially that the
hedging requirements concerning
CDS are very narrow and inflexible.
This could e.g. hinder investments in
member states with illiquid CDS
markets significantly and hedging
against general economic risks.
The EC could not comment as the
consultation period is ongoing.
EADS chief executive Tom Enders
yesterday warned that
governments should try not to
wield power over a tie-up of BAE
and EADS, as he addressed
German MPs to hammer out
concerns over the mega-merger.
Enders said that a merger the
size of the proposed tie-up should
not necessarily be subject to state
involvement, as the enlarged
company had to remain
We want to create a company
that is internationally much more
successful, that draws new
investors, he said.
EADS boss warns
states on control
RBS is expected to sell shares in
Direct Line at just below their
book value, according to banking
This would value the home and
motor insurer at just below
2.7bn, lower than the 3bn
originally targeted, but better
than the banks advising RBS had
feared. There are still a couple of
issues to be ironed out but
demand is better than the banks
worst fears, said a source.
The float, which will mark
Londons largest share listing this
year, is expected to be launched as
early as today.
Direct Line float
below target
BANCO Santanders Mexican units newly listed shares rose sharply yesterday after its Spanish
parent raised $4bn (2.5bn) in the second-largest listing in the US this year behind Facebook.
Santander Mexicos chief exec, Marcos Martinez (pictured), said the IPO was nearly five times
oversubscribed. The float, the biggest ever by a Mexico-listed company, valued Santander
Mexico at $16.5bn. The New York-listed shares closed at $13, after pricing at $12.19. The company
wanted to create extra cash buffers against potential losses from Spains property crash.
LLOYDS of London chief executive
Richard Ward yesterday said that
insurance premiums must rise, on
the same day that the market
announced profits of 1.53bn for
the first six months of 2012.
Rates do need to go up broadly
across the insurance sector, he told
City A.M.. Outside catastrophe-
exposed classes premiums have
been moving sideways.
Its challenging for
clients when you make a
profit but we operate over
a seven year cycle. Last
year we paid out 13bn in
The results which
measure the combined
performance of the
markets 88
compare with a
697m loss for
the first half of
2011, when
Lloyds was left
with a 3bn
bill following
earthquakes in New
Lloyds chief
says premiums
must increase
Zealand and Japan, as well as
tornadoes in the US.
For the same period this year total
catastrophe claims were around
300m, mainly relating to the
stricken cruise ship Cruise
Meanwhile Ward swatted aside
calls to delay the implementation of
new EU rules on capital
requirements known as Solvency II
and said the sooner it gets in, the
better. Lots of us are
uncomfortable with bureaucracy,
the role of local regulators and how
excitable theyre getting over
implementing Solvency II but we
need to get past that. Weve been
using our risk governance model for
the last two years and were going to
use it more all we need to do is
make sure that the FSA is
Weve done the heavy
lifting and are now
seeing a reduction in
our regulatory spend.
Our competitors on the
continent are still faced
with that hill to climb.
Richard Ward joined
Lloyds in 2005
BANKERS should belong to a
professional body like doctors
and accountants, with basic
standardised qualifications
designed to drive up standards of
behaviour, consumer
campaigners told MPs and peers
The Parliamentary Commission
on Banking Standards was also
told that the industry is
damagingly concentrated and
should be referred to the
competition commission.
Standards Commission told to
set up bankers qualification
BY TIM WALLACE A professional body cannot
prevent anything from going
wrong, but they can put systems
in place to make sure it does not
happen again, said Peter Vicary-
Smith from Which?
You would expect at least some
qualification in how to serve a
customer and what is fair
treatment. There are some things
going on in individual banks, but
nothing across the system.
Mike Dailly from the Financial
Services Consumer Panel argued
this would also make it easier to
deal with poorly behaved bankers.
Insurers find that central banks are all too predictable
UNDREDS of homes being
evacuated due to flooding in
Scotland and northern England
wasnt the ideal backdrop for
Lloyds of London to announce its
upbeat interim results, boosted by a
favourable claims climate. Then
again, even as the number of flood
alerts rises, it neednt sink the Lloyds
insurance markets optimism, partly
because of its limited exposure, but
mainly because such events are a drop
in the ocean next to the catastrophes
of 2011 the New Zealand earthquake
and Japanese tsunami among them.
Lloyds saw claims on the half year
down almost a third against the same
period in 2011, to 4.6bn from 6.7bn.
But while the insurance market in
general can breathe a sigh of relief at
a six-month period without such
horrific disasters, thats not to say
the rest of the year can be counted
on to remain calm. Earthquakes
arent becoming any more common
but they are no easier to predict, and
an earthquake of the politico-
economic kind, notably the possible
collapse of the Eurozone, remains a
distinct possibility, as current events
in Spain and Greece are busy
reminding us. Luke Savage, the
Lloyds finance director, said
yesterday that the Lloyds market has
minimised its investment exposure
to such an outcome but
acknowledged that a spike in
professional liability claims could
follow a single currency meltdown.
Speaking of investment, the euro
isnt the only man-made catastrophe
looming in the insurance sectors
path. The other is the low interest
rates imposed by central banks in
the hope of economic stimulus
earlier this month, alongside his
announcement of unlimited QE,
chairman of the Federal Reserve Ben
Bernanke vowed to keep US short-
term interest rates at rock bottom
into the middle of 2015. But in June
the European Insurance and
Occupational Pensions Authority
(EIOPA) warned that the continuing
impact of low interest rates was
making insurers more vulnerable
as previous commitments run into
unexpectedly poor returns on
investment portfolios.
Ernst and Young estimated in
October 2011 that, if low interest
rates persisted, over the next three
years, book yields in the industry
could decline by approximately 50
basis points (bps) for life insurers and
30 basis points for property/casualty
companies, putting pressure on
companies earnings, premium rates
and product designs. PwC has also
observed that 2011 was notable, not
just for its natural catastrophes, but
as the year insurers started to feel
meaningful effects from the low
interest rate environment.
Despite the improved climate for
claims in the last six months, then,
the long-term forecast on interest
rates doesnt look good for the
sector. Ironically enough, the quest
for yield this situation creates has
produced one bright spot
catastrophe bonds have also had a
stellar first half, with twice as much
issuance compared to the same
period last year $3.6bn (2.2bn).
Alas, the predictability of central
bankers means they have a much
more reliable prospect than most
insurers of doing just as well in the
next six months.
ACCOUNTANTS have listened to a
campaign to cut clutter from
company reports, the Financial
Reporting Council said yesterday.
But the council remains worried
about the reporting quality of some
smaller listed firms, after reviewing
326 sets of accounts last year.
The FRC is this week expected to
call on companies to regularly put
their audit contracts out to tender.
Bean counters
cut the clutter
FORMER senior Credit Suisse trader
Kareem Serageldin was arrested in
London yesterday in a fraud case
tied to subprime mortgages,
marking a win for US prosecutors
who have been awaiting his return
to the US since charging him early
this year.
Serageldin, 39, was the most
senior banker charged in a scandal
dating back to 2007.
Ex-Credit Suisse
trader arrested
ANGLO American Platinum will initi-
ate disciplinary action this morning
against miners who persist in the
illegal strikes at its Rustenberg
Strikes erupted at Rustenberg earli-
er this month, forcing Amplats to
shut five mines.
Since reopening, the turnout rate is
still less than 20 per cent which has
given Amplats no choice but to
force disciplinary action.
Wildcat strikes continue to batter
South Africas precious metal min-
ing operations.
Further protests have broken out at
the mines of gold producer
AngloGold, with the majority of its
35,000-strong workforce on strike. A
spokesman added that no formal
Amplats takes
action as miner
strike spreads
wage demands have been received,
although the thrust of the strike was
wage-related. Strikes also continued
at fellow miner Gold Fields.
Meanwhile, coal miner Coal of
Africa has halted operations at its
Mooiplats colliery in South Africa,
after 176 miners went on a legal
strike to complain about wages.
An glo Amer i c an PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
2,050 p
Bumi PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
300 p
JP Morgan Cazenove slashes target for Bumi
price amid investigation into Indonesian arm
1.6m ounces of gold
35,000 people
20 September 2012
750,000 ounces
50,000 65,000 ounces
28,000 people
10 August 2012
520,000 ounces
200,000 ounces
of platinumso far due to strike
200,000 people
12 September 2012
990,000 tonnes of coal
12,000 tonnes of coal
368 people
25 September 2012
3.5m ounces of gold
32,000 ounces
15,000 people
9 September 2012
No estimate on how
much it has lost yet
so far due to strike
so far due to strike
so far due to strike
in aected area
Cazenove, which advised Bumi
on its float, have downgraded
their target price for the firm to
100p a share.
JP Morgan said that Bumi
Resources, the Indonesian arm
of the business that is 29 per
cent owned by London-listed
Bumi, could be forced to turn to
the capital markets for funding
to shore up its balance sheet.
Standard & Poors yesterday
also moved to cast doubt on the
troubled Indonesian firm, and
cut Bumi Resources credit
rating by one notch to B plus.
On Monday Bumi, founded by
financier Nat Rothschild,
appointed City law firm
Macfarlanes to investigate
alleged financial irregularities at
the Indonesian business. The
inquiry is expected to look into
the development funds, which
focus on infrastructure.
A source close to Bumi told
City A.M. yesterday that it
couldnt make any decisions
regarding Bumi Resources,
which includes some valuable
Indonesian coal assets, until the
investigation is completed. It is
understood it could be a couple
of weeks before any conclusions
could be drawn.
Indonesian-based Bumi
Resources, part-owned by the
influential Bakrie family, said in
a statement yesterday it would
act as swiftly as possible to
resolve the allegations, adding it
would comply with all its
obligations under Indonesian
Bumi Resources chief
executive Ari Hudaya stepped
down from the London-listed
firms board just hours after the
probe was announced.
Bumi has lost 85 per cent of
its value since the IPO of Vallar,
subsequently renamed Bumi, in
Its shares closed down 7.14
per cent yesterday at 156p.
26Sep 20Sep 21 Sep 24Sep 25Sep
450.0 p
BPs oligarch partners raise the stakes as
they seek bankers to help buy out TNK-BP
THE RUSSIAN partner of oil giant
BP is holding a banking beauty
parade as it gears up to bid for BPs
entire 50 per cent stake in oil
explorer TNK-BP.
AAR, the vehicle used by a
quartet of Russian billionaires to
hold the other half of TNK-BP, is
willing to raise its offer to BP from
the original $10bn (6.2bn) for a 25
per cent stake.
The group hopes to make a bid
before its 90-day window expires
in mid-October, after which TNK-
BP is open to a rival approach from
state-owned oil group Rosneft.
A source close to the oligarchs
said they would likely make an all-
cash offer, compared to a mix of
shares and cash on the table from
AAR could also ditch its various
legal battles against BP as part of a
deal to buy out its partner, the
source added.
BP said in June that it planned
to sell some or all of its lucrative
but troublesome TNK-BP venture.
It has been in discussions with
AAR since then, but also started
talks with Rosneft in July.
BP is required to conduct 90
days of good faith negotiations
with AAR under the pairs
shareholder agreement.
TNK-BP has paid out $19bn in
dividends since BP set up the
venture in 2003, but is at the
centre of a sprawling dispute
between its owners over
management and exploration
Some analysts say that BP is
likely to prefer Rosneft as a buyer.
The prospect of acquiring equity
in the Russian oil major could
serve as a poison pill takeover
defence for the London-listed firm,
which is still feeling the effects of
the 2010 Macondo oil spill.
But others are sceptical that
Rosneft and AAR would agree to
work together, given the oligarchs
scuppered last years 10bn tie-up
between Rosneft and BP.
STOCKBROKER Numis yesterday fore-
cast a 20 per cent increase in rev-
enues for the second half of the year
compared to the first half, bucked up
by an increase in deal related income
from equity transactions and M&A
The firm, which focuses on small to
mid-cap clients, said overall revenues
for the six months ending 30
September are expected to be in line
with last years numbers for the same
This is despite a 20 per cent fall in
second half combined institutional
commission and trading revenues, as
secondary volumes across the market
Chief executive Oliver Hemsley said:
As a strong and well capitalised bro-
ker and adviser, we are taking the
opportunity of industry dislocations
to attract high quality corporate
clients and staff to Numis.
The broker, which is listed on FTSEs
Aim index, has managed to offset the
poor numbers from commission and
trading revenues by boosting revenue
from deal making.
It gained increased revenue from
ten equity transactions in the second
half of the year, including three ini-
tial public offerings for firms, and
what it called a steady flow of M&A
activity. The firm has also established
a foothold in the fast-growing retail
bond market.
Upbeat Numis
reveals 20pc
revenue uptick
ICAP, the worlds largest inter dealer
broker, lowered its forecast for annu-
al profit yesterday as it revealed rev-
enues for the first half of the year
are expected to plunge 14 per cent.
Lacklustre trading over the sum-
mer, with volumes in capital mar-
kets seeing double-digit drops, forced
the firm to cut its pre-tax profit fore-
cast from a range of 335m and
365m to between 307m and
346m for the year to 31 March 2013.
Analysts now expect profits to fall
around the 340m mark.
Icap had already said that it expect-
ed its revenue to fall nine per cent in
the first half, but yesterday revised
this to a 14 per cent drop for the six
months to 30 September.
Icap, which has a market cap of
2.2bn, was relegated from the FTSE
100 to the FTSE 250 a fortnight ago
after falling to the bottom of the
blue chip index.
Markets sent the companys shares
down four per cent yesterday on the
back of the negative trading update.
Chief executive Michael Spencer
Icap profit view
sapped by low
trading volume
said: The macroeconomic environ-
ment remains difficult and its too
early to judge if recent actions by the
Federal Reserve and the European
Central Bank will result in a sus-
tained improvement in market confi-
In any event, we will continue to
take the necessary action to constrain
our cost base as well as position Icap
optimally for upcoming financial reg-
ulatory reform.
Trading volumes have had a torrid
time over the summer, with
European trading in July and August
down a third on last year, to its lowest
level since mid-2009.
City grandee Michael Spencer has seen tough trading conditions over the summer
26Sep 20Sep 21 Sep 24Sep 25Sep
350 p 332.50
Disappointing and with prot before tax guidance lowered the shares
are likely to be weak. The group does remain strongly cash generative and offers
around a six per cent yield but it is likely to continue to underperform
short term with uncertainty over business volumes.

A poor rst half trading update. Icap is not expensive but far from
compellingly cheap valued at 8.6 times historic earnings with earnings declines
forecast. It has a 6.4 per cent covered dividend. But again that is not
exceptional in the sector. Nothing for the bulls here.

Notwithstanding the recent pick-up in volumes, the group notes that

visibility over activity remains poor. Management have reiterated their expecta-
tion that full-year pre-tax prot will be within the current consensus
range, although the midpoint of the prevailing range is 7 per cent lower.


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TRADING volumes on the London Stock
Exchange (LSE) fell by a fifth during the
summer months, the bourses parent
group announced yesterday.
Average daily UK equity trading vol-
ume was 4bn for the five months to 31
August, down from 5bn for the same
period last year. Including Italy, the total
amount raised across the groups mar-
kets fell 81 per cent to 4.3bn.
LSE is focusing on the development of
its clearing and data services businesses,
although the number of terminals sub-
scribing to its real time UK data service
dropped by seven per cent.
Chief executive Xavier Rolet said the
companys information business has
performed well and its strategy of tar-
geting non-cyclical business is working:
This is particularly pleasing given that
Volumes drop by
20pc at London
Stock Exchange
some parts of our business have experi-
enced difficult market conditions.
Mark Thomas of Edison Investment
Research said: Diversification has
helped offset challenging core markets.
On the upside, the 23 per cent growth in
initial margins will help treasury income
and there have been small equity market
share gains.
London Stock Exchange Group PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
1,090 p
Gordon defied the market
gloom to bounce back into
profit in the first six months of
this year, according to results
published yesterday.
Despite poor trading volumes
on the London Stock Exchange,
the firms bread and butter
source of business, it delivered
a 1.2m profit for the six
months ended 30 June 2012
reversing a 2.7m loss it
incurred during the first half of
last year.
The firms profits were
Panmure Gordon soars back
into the black to defy gloom
boosted by a 41 per cent
increase in corporate
transaction revenues.
This drove net commission
and fee income to 11.2m
compared to 9.5m of income
in the first six months of 2011.
A cut in administrative
expenses down to 8.7m from
11.4m also helped the firm get
back into the black.
Chief executive Phillip Wale
said: Being profitable every
month so far this year reflects
the impact of actions taken to
reduce costs in 2011 and the
inherent strength of Panmure
Gordons business.
CENKOS Securities, the broker and
bookrunner, reported a drop in
annual revenue and profits
Revenue fell by nearly a fifth to
20.2m for the six months ending 30
June 2012, down from 25.1m in June
2011 denting pre-tax profits to
3.5m from 5m in June last year.
Funds raised for clients also
dropped substantially from 619m to
Its underlying corporate finance rev-
enue, which includes its market mak-
ing activities, underpinned the drop.
Corporate finance revenues in this
division fell to 12.9m from 18.3m.
Cenkos feels
profit squeeze
The Cily of London's nev Sheris lake oce lomorrov,
foIIoving lheir eIeclion al GuiIdhaII in }une. AIderman }erey
Ivans, vho reresenls lhe Ward of Chea, and NigeI PuIIman
viII auend Lord Mayor David Woouon in carrying oul his
ociaI dulies, auend sessions al lhe CenlraI CriminaI Courl (OId
aiIey) and resenl Cily of London elilions lo ParIiamenl. They
lake over from AIderman AIan Yarrov and Wendy Mead.
Alderman Jeffrey Evans and Nigel Pullman
begin City shrieval duties

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Animal pasts in London's landscape
A TOP European Parliament commit-
tee voted unanimously in favour of
rules to cut down high frequency
trading yesterday, and move forward
plans to limit the number of positions
market participants can hold.
MEPs claimed the markets in finan-
cial instruments directive (Mifid2)
will promote market stability by forc-
ing traders to place orders in markets
for at least half a second.
But analysts said the new rules will
raise costs for firms and consumers,
limit competition in financial mar-
kets and reduce global trade.
Sharon Bowles, the Lib Dem MEP
who chairs the economic and mone-
tary affairs committee (ECON) that
voted on the plans yesterday, believes
the move will reduce market volatil-
We are clamping down on so-
called food speculation, by impos-
ing hard limits on how
many contracts or posi-
tions one market participant can hold
at a time, which will promote stable
conditions and prevent market abuse,
she said. In addition, rigorous checks
by national and European authorities
will be enforced on those who have a
real interest in the physical commodi-
ty and carry out genuine hedging.
However, analysts said the extra reg-
ulations would add costs to firms like
utilities, which will end up being paid
for by consumers, as well as driving
trade out of the EU.
The proposals seem likely to lead to
major restructuring of trading and
customer risk management opera-
tions in commodity firms, including
the curtailing of activity and customer
offering in certain areas and
potential relocations to
Switzerland or Singapore.
said Robert Finney from law
firm Holman Fenwick
He said many non-
Europeans will no longer be
able to access EU mar-
kets, hitting global
Ex-FDIC chair calls for stricter rules
I US banks should have the amount
they can borrow against their equity
halved, according to Sheila Bair, the
former chairman of the Federal Deposit
Insurance Corporation (FDIC). Bairs
memoir of the financial crisis, Bulls by
the Horns, said banks should have a
borrowing ratio of eight per cent, rather
than the current four per cent, a move
she claims would cut risk in the financial
system. Bair, a Republican, served as
FDIC chief from 2006 through 2011, and
is widely credited with seeing the
mortgage crisis before it happened.
IMA hits back at Wheatley
I The Investment Management
Association, the fund manager trade
body, yesterday said the industry had
nothing to hide on charges. It follows
comments on Tuesday by Financial
Services Authority head Martin
Wheatley that fund managers should
put customers before profits. IMA chief
executive Richard Saunders said: No
investment can be made free of cost.
For ordinary investors, funds offer the
ability to acquire a diversified portfolio
at much less cost than investing direct
in shares or other assets.
MEP Sharon Bowles
A WEST End business group has
called for the end of the wall of
red buses that clog up Oxford
The New West End Company
(NWEC), which represents
retailers and landlords in the area,
wants to introduce pedestrian-
only times to coincide with the
completion of Crossrail in 2018.
It claims that previous traffic-
free days during the Christmas
rush have boosted footfall, and
that shopper surveys have flagged
up enthusiasm for banning the
West End companies call for a
red bus ban to entice shoppers
Our challenge over the next
five years is to drive growth and
investment; create a world class
environment and deliver a game
changer to end the wall of buses
and congestion on our streets,
said NWEC chief executive
Richard Dickinson.
The group also plans to examine
the benefits of the extended
Sunday opening hours during the
Property owners will also be
asked to stump up 15m to invest
in street lights and pavements in
the area as part of the NWECs
five-year plan, unveiled at
Selfridges yesterday.
REBEKAH Brooks and Andy Coulson
learned yesterday in court they will
face trial over phone hacking
charges next September, alongside
five other ex News of the World staff.
Brooks and Coulson, who edited
the paper from 2000 to 2003 and
from 2003 to 2007 respectively, are
accused of a conspiracy to access
voicemails. The other five are former
chief reporter Neil Thurlbeck,
former news editors Ian Edmondson
and Greg Miskiw, ex managing
editor Stuart Kuttner and former
reporter James Weatherup.
They were released on bail and
will face trial on 9 September 2013.
Hacking trial
starts in 2013
NORTHERN England and Scotland have been hit hard by flooding, leaving UK insurers facing
a hefty bill of up to 40m for this weeks damage. Analyst Barrie Cornes at Panmure Gordon
told City A.M. that RSA faces a bill of 12-15m, Aviva 15-20m and Legal & General around
3-5m. This is on top of substantial payouts resulting from floods earlier in the summer.
MEPs clamping
down on high
frequency trade
Dominos chief executive Lance Batchelor said online rose nearly 40 per cent
SHARES IN Dominos Pizza fell almost
four per cent yesterday after the com-
pany surprised the City with slower-
than-expected third quarter sales.
The group, which has 770 stores in
Britain, Ireland, Germany and
Switzerland, said like-for-like sales
increased 3.7 per cent over the 17
weeks to 23 September.
This contrasts with an 8.1 per cent
jump in the last quarter and 4.1 per
cent in the third quarter of 2011.
Wayne Brown, analyst at Canaccord,
said: The degree of the slowdown will
come as a surprise especially as this
period should have seen a benefit from
the Olympics.
Dominos shrugged off concerns,
attributing the weaker sales to a 43 per
cent cut in ad spend from last year,
when the launch of its stuffed crust
and Gourmet Pizza range drove sales.
The results also faced a tough com-
parison in the previous quarter, when
record levels of rainfall prompted
more consumers to order takeaway.
Total sales grew 7.9 per cent to
136.4m in the period compared with
Dominos Pizza
misses out on
Olympic boost
127m last year while total online
sales rose by 39.3 per cent to 62.8m.
Online sales now account for 58.4
per cent of UK revenue while 18.5 per
cent of Dominos customers ordered
through their mobile devices.
The group plans to open 60 UK stores
this year but only 30 have been
launched in the year-to-date due to
planning challenges, raising ana-
lysts concerns it will not reach its full
year profit target.
Chief executive Lance Batchelor said
the fourth quarter was traditionally
the strongest period and he was con-
fident of meeting City consensus
earnings of 46.6m for the full year.
Domino's Pizza Group PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
570 p
ONLINE? Interviews by Phoebe Loveland
Absolutely being able to order food
online is incredibly convenient. I use it
for orders both at home and at work. It is so
These views are those of the individuals above andnot necessarily those of their company

Yes whenever I am at home, I will

always order online. I like being able
to track my order so I know how quickly it will
No Ive never needed to yet and I
imagine itd be a slower process. I
would give it a try but Id rather actually talk to
a person.

THE HUT Group, the online retailer
that counts Sir Terry Leahy and Sir
Stuart Rose among its backers,
posted soaring sales yesterday
boosted by two acquisitions earlier
in the year.
Sales rose 54 per cent to 66.2m
in the six months to 30 June as
earnings before interest, tax,
depreciation and
amortisation rose to 4m
from 300,000 in the same
period last year.
The company said it has
"successfully integrated
Lookfantastic, a luxury hair
Shepherd Neame toasts success
nShepherd Neame, the Kent-based
brewer of the Spitfire and Asahi ales,
yesterday reported record sales and a
40 per cent leap in profits to 9.1m in
the year to July. The company bought
seven pubs and hotels over the period,
leading to a 10 per cent rise in
turnover to 133m. Chief executive
Jonathan Neame said his strategy of
investing in a downturn had paid off.
Imagination falls on Texas fears
nShares in British chip designer
Imagination Technologies took an 8.6
per cent hit yesterday after key partner
Texas Instruments said it would stop
making processors for smartphones
and tablets. Investec said the move
from Texas Instruments which uses
Imagination designs for chips in
devices such as Amazons Kindle Fire
could hit profits by 20 per cent.
Topps Tiles predicts 13m profit
nPre-tax profit at Topps Tiles will be
roughly 13m, it predicted in its pre-
close report yesterday, in line with
analysts consensus. Revenues at the
firm grew from 175.5m in 2011, to
177m, the report said. This growth
reflected a slowdown in the pace of
decline in like-for-like sales which
shrunk two per cent to 2011, but only
one per cent in the year to 2012.
Vitamins and beauty site help
drive jump in Hut Group profits
BY KASMIRA JEFFORD and beauty website, and Myprotein,
which sells vitamins, after buying
the two sites in the past 18 months.
The group, which also sells
clothes, bags and toys said margins
also improved after shifting away
from less profitable categories,
including music and books.
Some 44.1m shoppers visited its
sites, up from 32m last year.
Former Marks & Spencer boss Sir Stuart Rose took a stake in the Hut Group last year
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STRUGGLING fashion retailer Esprit
saw shares tumble seven per cent on
the Hong Kong stock exchange
yesterday after it reported full-year
profits that missed expectations.
Esprit is trying to restructure its
business, last year launching a four-
year HK$18bn (1.4bn) turnaround
plan and hiring supermodel Gisele
Bundschen to front its global
The group yesterday said the
transformation plan remained on
track but warned Europes
unresolved debt crisis and the
economic slowdown in China made
next years performance uncertain.
Revenue for the year to 30 June
dropped 11 per cent to HK$30.17bn,
due to its exit from the US, store
closures in Europe and Asia and
tough economic conditions.
Esprit reported a net profit of
HK$873m, up from HK$79m a year
earlier, but missing consensus
forecasts of HK$1.01bn.
In June, the group was hit by the
unexpected departure of its chief
executive Ronald van der Vis,
followed by the chairman Hans-
Joachim Krber.
Esprit is pinning its hopes on new
chief Jose Manuel Martnez
Gutirrez, a former executive at
Zara owner Inditex who took over
the helm yesterday, to drive the
restructuring plan and revive sales.
Esprit shares
slide as profits
miss estimates
HOUSE of Fraser
yesterday said its
customers have
put summer
behind them and
are stocking up
their winter
wardrobes as the
department store
group posted a
strong start to
the second half of
the year. The
group, part-owned
by Scottish tycoon
Sir Tom Hunter,
posted a 4.6 per
cent rise in like-
for-like sales in the
eight weeks to 22
September, driven
by strong demand
for house brands
like Linea, Biba
(pictured) and
Howick. It
continues to be
difficult to predict
when economic
conditions will
improve. However,
we are encouraged
by the strong start
to the second half
the group said.
Same store sales
for the first half
climbed 1.7 per
cent on earnings of
12.5m up
fractionally on last
year. Meanwhile
online sales soared
by 60 per cent in
the period.
said yesterday its long-awaited sale
of PriceGrabber has fallen through,
after purchaser Ybrant failed to
close the transaction.
Experian, which announced the
$175m (108.4m) sale in May, said
it considers Ybrant to be in breach
of contract for not sealing the deal
by the final deadline.
The UK office of India-based digi-
tal marketer Ybrant did not
respond to requests for comment.
Experian will continue to treat
the assets as discontinued opera-
tions as it looks at options to sell
the business, which grew organic
revenues by one per cent in the five
months to the end of August.
The FTSE 100 company snapped
up PriceGrabber for around $485m
in 2005, when it was part of the
GUS group that once owned Argos
Experians plan
to sell price site
to Ybrant fails
and a majority stake in Burberry.
Experian considered selling
PriceGrabber as early as 2008, but
failed to attract high enough bids as
the financial crisis began to bite.
Clearly this is a disappointment
for shareholders, said Shore
Capital analyst Robin Speakman in
a note.
We expect Experian to pursue
Ybrant in so for as is possible for
breach of contract.
Experian PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
1,045 p
FUND manager Liontrust Asset
Management yesterday reported an
annual tripling of net inflows for the
first half of this year as its recent
acquisition of Walker Crips Asset
Management sent assets under
management soaring to 2.36bn.
Net inflows for the first half of this
year hit 181m compared to 59m for
the first six months of last year, giv-
ing Liontrust its ninth successive
quarter of positive inflows.
Shares in the firm hit a five month
high on the FTSE Fledgling index on
the back of the news, closing up 3.75
per cent to finish at 109.72p, their
highest value since May.
The all-share deal to buy Walker in
April added 580m of funds under
management for the first quarter,
helping take its total asset base from
Liontrust roars to asset success
after Walker Crips boosts funds
1.53bn six months ago to 2.36bn as
of 24 September 2012.
Liontrust, which is led by former
Societe Generale unit trust leader
John Ions, has most of its assets in
retail, around 1.75bn, with the
remaining 576m managed on behalf
of institutional clients.
Ions yesterday said the incoming
Retail Distribution Review (RDR) legis-
lation due for January 2013 would
provide tremendous opportunities
and pose significant threats to firms.
The changes brought on by RDR
should not be underestimated, he
There may be much focus on price
and consumer outcomes but it has
also clearly identified that distribu-
tion power is now vital. An even
greater amount of fund flows will be
controlled by fewer more powerful
The ifs School of Finance is a not-for-profit professional body and registered charity, incorporated by Royal Charter.
MSc in Banking Practice and Management
and Chartered Fellowship
Postgraduate Diploma in Banking Practice and Management
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Applications close Friday 30 November 2012 for a January 2013 start.
TalkTalk tops tables for Ofcom
tiffs but overall complaints fall
TALKTALK has kept its title as the
most complained-about
communications firm for the sixth
consecutive quarter, watchdog
Ofcom revealed yesterday, though
the number of customer grievances
with the industry overall is falling.
TalkTalk, whose customer base
fell three per cent to 4.05m in the
last quarter, yesterday conceded
there is still work to do after it
had the highest complaints rate for
landline telephone and broadband
services in the three months to the
end of June.
The firms landline business
received 0.53 complaints to Ofcom
per 1,000 customers in the quarter,
more than double the industry
average of 0.23. Virgin Media, the
best performer, posted a rate of 0.14.
And TalkTalks broadband
offerings got 0.42 complaints per
1,000 users, compared to the
industry average of 0.24 and best
performer Skys rate of 0.1.
But overall complaints across both
services have broadly fallen since
Ofcom started releasing data in 2010.
TalkTalk said in a statement that it
received 35 per cent fewer landline
complaints compared with the same
quarter last year, while broadband
complaints fell 28 per cent.
For mobile phones, Three UK
retains its title as the most
complained-about network, with a
rate of 0.19 issues per 1,000
customers. Most were sparked by
disputes over charges and customer
service, according to Ofcom. O2,
meanwhile, stays top of the table
with a complaints rate of just 0.05.
Q4 2010
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
BT Retail
TalkTalk Group
Virgin Media
Industry Average
complaints a day
receives just under
The watchdog says
customer satisfaction
with communications
services is around
is the most complained-about
landline and broadband provider
is the most
mobile phone network
is the most complained
about pay-TV company
hopes its work transforming the
Olympic Games sites will keep it on
track for growth though its own
legacy business in the United States
continues to weigh on earnings.
FTSE 250-listed Atkins, which helped
build the Olympic Park at Stratford,
said yesterday it has started work on
legacy infrastructure following the
The firm was hired last month to
convert the site into the Queen
Elizabeth Park by spring 2014, taking
down temporary venues such as the
basketball arena and building a
mountain biking track and competi-
tive cycling circuit.
Atkins yesterday said trading has
been in line with expectations in the
second quarter, with a good perform-
ance in the UK led by its nuclear arm.
The firm recently penned a recent
deal with Areva to jointly bid for
decommissioning and clean-up work.
This has been offset by weakness
from closing out contracts in its loss-
making Peter Brown business.
The group yesterday repeated its
view that poor conditions in the US
and project delays in the Middle East
will dampen profits, a forecast that
sent its shares tumbling in August.
We believe that Atkins remains well
positioned to benefit from positive
global infrastructure demand drivers,
said Panmure Gordon analyst Andy
Brown. While credibility took a hit
from its first quarter update, we stay
positive. It has shown it can bounce
back from adversity.
WS Atkins PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
715 p
Shanks Group PLC
26Sep 20Sep 21 Sep 24Sep 25Sep
92.5 p 79.00
TROUBLED property repairs group
HomeServe said yesterday
customer complaints have fallen in
recent months, as its overhaul,
prompted by the Financial Services
Authority (FSA) starts to pay off.
The firm, whose shares fell by
half after financial watchdog, the
FSA, started a policy mis-selling
probe, said customer numbers fell
from 3m to 2.5m in the year to
September, in line with forecasts.
We are making progress in
implementing our plans to reshape
our UK business and restore its
customer focus, the company said
in a trading update.
HomeServe, which sells cover for
and fixes boilers and burst pipes,
Homeserve says overhaul is on
track as customer numbers fall
said half-year pre-tax profits are
expected to be higher than the
23.5m recorded in the previous
While its UK operations are
shrinking, the groups bottom line
will be boosted by the purchase of
French business Domeo at the end
of 2011.
The FSA probe, which
HomeServe said was ongoing and
would take a number of months to
complete, could result in a fine or
compensation for customers. The
company suspended telesales in
October following new of the
HomeServes FTSE 250-listed
shares closed down 1.4 per cent at
218p, broadly in line with the rest
of the index.
Shanks forced to issue a profit
warning as key markets slow
SHARES in waste management
firm Shanks Group sank more
than 12 per cent to close down at
79p yesterday, after it issued a
profit warning.
Shanks said that its UK and
Dutch solid waste markets had
deteriorated significantly,
prompting the board to warn that
full-year profit would miss
analysts expectations.
The solid waste business, which
deals with commercial, industrial
and construction waste, has been
hit by the Eurozone crisis and the
slump in construction output.
Falling recyclate prices, lower
volumes and increased price
competition during the summer
have put pressure on margins,
the FTSE 250-listed company said
in a statement.
Chief executive Peter Dilnot
said yesterday that while
conditions in solid waste remain
challenging, other parts of the
business were performing well.
Our cost reduction plans are
progressing well and, with the
new organisation in place, the
group remains firmly on track to
deliver profitable growth in the
medium term.
Olympic legacy
will be a boon
for WS Atkins
FIFTEEN Westferry Circus, the Canary Wharf offices leased by Morgan Stanley, has been put up
for sale after it fell into receivership earlier this year. Savills has been instructed to sell the offices
for more than 129.5m a net initial yield of six per cent. The property went into receivership
after a default on a 130m loan in April this year. The building was owned by Vico Capital,
founded by Irish couple Brian and Patricia O'Donnell, who sought bankruptcy earlier this year.
INFLATION when each pound buys
you less is generally deemed a bad
thing, particularly if youre the Bank
of England tasked with keeping it at
just two per cent.
But at last nights charity auction of
Bank of England banknotes with low
serial numbers, inflation was all the
rage. The higher the better in fact,
with all the proceeds going
to the Banks two
chosen charities: the
Kids Company
and the British
Association for
Adoption &
The most lucrative
bidding on the night
centred on a sheet of
Inflation all the
rage at Banks
charity auction
50 notes 35 in fact all featuring
the Whitbread steam engine. After a
frenzy of hands, it ultimately sold for a
staggering 5,500 over double the
guide price, and three times the face
value of the notes.
But there were some cheaper lots on
offer too with several single 50
notes bearing the signature of chief
cashier Chris Salmon going for a
mere 100 only double the
face value.
In total, according
to the Capitalists
rough calcula-
tions, the auc-
tion made a
hefty 84,735
more than
tripling the
25,105 made at the
Banks last banknotes
charity auction in 2007.
The most expensive lot a
sheet of 50 sold for 5,500
GREAT Ormond Street Hospital
Childrens Charity was yesterday
the worthy recipient of a 64,000
cheque from the City of London
While the pupils from the
school are no strangers to
fundraising, this is the largest
amount they have ever raised for
any charity. And it wasnt won
One challenge was a staggering
48-hour row an astounding feat
City of London School raises
64k for Great Ormond Street
which raised a worthy 13,000 on
its own.
As the school, whose classrooms
overlook St Pauls Cathedral, says
on its website: City of London
School takes charitable giving
seriously. The Capitalist wouldnt
The cheque will help Great
Ormond Street to rebuild and
refurbish its vital equipment as
well as fund research into
pioneering new treatments.
Pupils at the City of London School raised a worthy 13,000 for a 48-hour row
Got A Story? Email
ITS good to know that despite
the endless banking inquiries,
awkward questions about key interest
rates and attempts to redraw the
framework of finance regulators still
have time to enjoy the good life. On
Tuesday fund managers and FSA staff
enjoyed champagne jelly for lunch
during an all-day conference at
upmarket City venue The Brewery on
Chiswell Street. At 522 per person,
the FSA Asset Management
Conference didnt come cheap but
guests were treated to speeches from
the likes of chief regulator Martin
Wheatley, although it
is not known whether
he sampled the boozy
pudding. One
attendee, who may
wish for a part
refund, described
the dish as not as
good as the
cassoulet, but much
better than the
coffee, which was a
total let down. The
FSA is in the process of
transitioning to a twin
peaks model which will
hopefully involve less
horror than the David
Lynch television series of
the same name so staff
could probably do with
some relaxation time as
the changes take
THE PROSPECTS for growth over the
third quarter were boosted yester-
day, as insolvencies declined, while
retail sales edged up.
High street sales volumes grew in
September, the Confederation of
British Industry (CBI) said in its dis-
tributive trades survey yesterday.
Thirty-three per cent of respon-
dents said their sales volumes had
grown, compared to 27 per cent
who said they fell.
This resulted in a balance of plus
six per cent, up nine percentage
points on last month.
It is encouraging that sales on the
high street have seen a slight rise in
the year to September, said Judith
McKenna, Asda chief operating offi-
cer and CBI official.
However, while the squeeze on
Growth hopes
boosted by raft
of upbeat data
BY BEN SOUTHWOOD family budgets may have eased in
the short term, thanks to the fall in
inflation, ongoing economic fragili-
tycould affect household spending
later in the year, McKenna warned.
This good news for the retail indus-
try came in tandem with data pre-
dicting a fall in company
insolvencies in the third quarter.
Business liquidations will decrease
2.8 per cent compared to the second
quarter, predicted credit agency
Graydon, putting them 2.1 per cent
lower than the third quarter last
But Graydon managing director
Alex Schwendtner said firms should
be wary. Companies need to be cau-
tious as a fall in business failures
this quarter should not necessarily
be taken as reassurance that we are
now out of the economic woods,
Schwendtner said.
US NEW home sales slipped
slightly in August, data revealed
yesterday, but not enough to dent
the strong recovery.
Sales of new single-family
homes were 373,000 in August,
on the headline adjusted
measure, down 0.3 per cent on
the revised July figure.
Despite this monthly slip, sales
US home sales slip lower in
August despite upward trend
were still some 81,000 or 27.7
per cent higher than August
last year, the data, put out jointly
by the Department of Housing
and the Census Bureau, showed.
Even though sales fell slightly,
the median price of a new home
climbed a record 11.2 per cent to
$256,000 (158,490), the highest
median since March 2007 and a
17 per cent climb on August
Any good economic news will buoy the election campaign of President Barack Obama
THOUSANDS of savers with big
pension pots could be clobbered
with massive tax bills unless
they opt-out quickly after auto-
enrolment, PwC said today.
Pensioners could lose fixed or
enhanced protection on their
savings, opening them up to
thousands of pounds worth of
tax liability, the accounting
giant claimed, unless they make
sure to opt out of auto-
Individuals put protections on
their account to ring-fence their
savings from tax changes that
subjected big pots initially
those bigger than 1.5m, and
PwC warns that 20,000 may
be hit with pension tax bill
BY BEN SOUTHWOOD eventually those bigger than
1.8m but these protections
were conditional on those savers
making no further
If anything extra is put into
those pots through auto-
enrolment, no matter how little,
the savers in questions could
face huge tax bills.
We estimate up to 20,000
people could be at risk of
enormous tax penalties,
warned Stephen Etherington,
tax director at PwC. Civil
servants, hospital consultants,
entrepreneurs and chief
executives are the types of
people who could be affected.
UK CITIZENS erroneously believe
that the country is being concreted
over, survey evidence from
SmartNewHomes revealed
Fifty-three per cent of
respondents in a poll said they
believed the UK was being
concreted over, while some three
quarters overestimated the
proportion of English land thats
been developed.
Sixty per cent of new home
developments are built on
brownfield sites, said
SmartNewHomes boss Steven Lees,
It is a shame thatthe public
remains blinded.
Public: UK is
too built-up
Bank survey says borrowers
face looser credit conditions
CREDIT conditions loosened up
in the third quarter of the year,
according to a survey from the
Bank of England released
The availability of secured
credit to households increased
significantly in the three
months to September, lenders
told the Bank of England in
fact it was the largest reported
increase in credit
since the
survey was
carried out
in 2007.
According to respondents, the
loosening was concentrated on
borrowing at loan to value ratios
(LTVs) higher than 75 per cent
sure to be a relief for a segment of
the market that has been tightly
squeezed over recent months.
Analysts suggested the Funding
for Lending Scheme (FLS) was
finally delivering easier credit to
The increase in availability of
secured credit for borrowers
requiring higher LTVs is a positive
sign, pointing to an easing of
lenders affordability criteria,
said LMS boss Andy Knee.
Lending for house purchases
looks set to grow over the next
quarter, boosted by FLS.
But the picture wasnt all
positive, as the availability of
corporate loans shrunk to a yet more
negative position from minus 3.2
in the second quarter to minus 5.5 in
the third.
Citi analyst Michael Saunders said
that while this result was negative,
the data should be taken with a
pinch of salt, noting that the index
increased in 2010 without feeding
through to cheaper borrowing for
Credit availability bounced up in the third quarter
Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2
60 netbalanceofpositive
2007 2008 2009 2010 2011 2012
Mervyn King wants to boost lending
BANK lobbyists have created a false
debate around industry regulation,
peddling fallacies to pressure the
authorities into letting them off
lightly, the Bank of Englands
Robert Jenkins claimed in a speech
published yesterday.
The banking lobby would have
us believe higher capital
requirements and lower leverage
will damage economic growth and
retard the recovery, the Financial
Policy Committee (FPC) member
told a regulatory summit.
But he argued more capital does
not necessarily lead to less lending,
and in fact can cut funding costs
and so help lending and
Jenkins also said return on equity
is a terrible measure of medium-
term profitability as it fails to
account for the price of risk.
But bankers continue these
myths because they may not
understand their own businesses,
he claimed: Have you met a single
senior banker who understands his
cost of capital? I have not.
FPC official:
rules debate is
based on lies
THE FORUM: Page 18
SJ Berwin
George Pinkham has been
appointed as the new head of the
law firms Hong Kong office. He
founded SJ Berwins Paris office
in 2001, and is a member of the
firms strategy committee.
Pinkham will remain co-head of
SJ Berwins international funds
department and will be joined in
Hong Kong by London-based
senior associate Guo Sun Lee.
The wealth management outsourcing provider has
announced the appointment of Kevin Addison as managing
director and head of UK asset management distribution. He
was previously head of wholesale at Scottish Widows
Investment Partnership. In his new role, Addison will be
responsible for developing SEIs relationships with large
investment distributors.
Hitachi Group Europe
Kiyoshi Yamamoto has been appointed managing director
of the Japanese electronics giants European subsidiary.
Now based in London, he was previously executive vice
president of Hitachi America.
Simmons & Simmons
Helen Hancock has been appointed as a banking partner at
the law firm. She joins from Burges Salmon, where she was
director of banking. Hancock has over 20 years experience
in transactional banking and capital markets work, and she
was previously a partner at Simmons & Simmons between
1995 and 2005.
Sidley Austin
Matthew Cahill has been appointed as a partner in the law
firms global finance practice. He is returning to London
after practising with a Magic Circle firm in its Abu Dhabi
office. Cahill has over 20 years experience, and has a
particular focus on regulatory capital-driven transactions.
Frontier Investment Management
The alternative investment specialist has announced two
senior appointments to its business development team.
David Scammell joins as senior business development
manager from Friends Provident International, where he
was regional sales manager for Singapore. Elisabeth Silva
joins as a sales support manager from BNP Paribas
Investment Partners, where she was relationship manager.
Psigma Investment Management
Gerald Eastwood has been appointed marketing and
communications manager at the investment management
firm. He joins from PensionsFirst, where he was assistant
vice president of marketing.
+44 (0)20 7092 0053
Wall St tumbles
as debt crisis in
Europe weighs
HE S&P 500 fell for a fifth
straight trading day yesterday as
protests in Spain and Greece
over Eurozone austerity
measures raised fresh concerns over
Europes ability to get its debt crisis
under control.
Investors sold risk-sensitive sectors
such as energy and tech, while they
poured money into more defensive
areas like utilities and consumer
staples. The S&P technology sector
declined 0.8 per cent and the energy
sector fell 0.9 per cent, while S&P
utilities ended up 0.2 per cent.
Violent protests in Madrid against
expected austerity measures and
growing talk of secession in the
wealthy Catalonia region increased
pressure on Spanish Prime Minister
Mariano Rajoy as he moves closer to
asking Eurozone policymakers for
rescue money.
Meanwhile, Greece faced its biggest
anti-austerity protest in more than a
year as international lenders
admitted to difficulty in working out
how to solve Athens debt crisis.
When it gets down to it, there is
real disagreement between the
people in the streets and the policy
makers in Europe, said Tim
Ghriskey, chief investment officer of
Solaris Group.
I think its certainly causing some
concerns for investors, he said,
adding, The markets probably
looking for an excuse to have a
The S&P 500 is up 5.2 per cent so
far for the third quarter and 1.9 per
cent for September, historically a
weak month for equities. Gains were
largely tied to actions taken by the
US Federal Reserve and European
Central Bank to prop up their
For the day, the Dow Jones
industrial average was down 44.04
points, or 0.33 per cent, at 13,413.51.
The Standard & Poors 500 Index was
down 8.27 points, or 0.57 per cent, at
1,433.32. The Nasdaq Composite
Index was down 24.03 points, or 0.77
per cent, at 3,093.70.
Also weighing on tech shares
yesterday, Jabil Circuit tumbled 9.9
per cent to $18.90 after the
technology company reported
fourth-quarter earnings that missed
expectations and forecast weak first-
quarter results.
Other recent earnings warnings
from companies including FedEx,
the worlds second biggest package
delivery company, and Caterpillar,
the biggest maker of earth-moving
equipment, have sparked concerns
about global growth.
Outlooks for the third quarter are
at the most negative since 2001,
according to Thomson Reuters data.
The negative-to-positive ratio for the
upcoming earnings period stands at
4.3 to 1. On the plus side for the day,
American Greetings, jumped 17.3
percent to $16.82 after the company
said it received an offer to go private
from a group led by its chief
executive, valuing the greeting card
RITAINS top stock index hit a
three-week low yesterday, with
banks and miners hardest-hit on
concern that the Eurozones
problems, highlighted by protests in
Spain and Greece, posed a threat to
global growth.
Growing talk of secession in Spains
Catalonia region, a sharp fall in the
countrys GDP, clashes at an anti-
austerity protest in Greece and news
that Greece's international lenders faced
increased tension over how to resolve
Athensz debt crisis all led investors to
The FTSE 100 index finished 91.62
points, or 1.6 per cent, lower at 5,768.09,
the lowest close since early September.
The index suffered its biggest one-day
fall in two months. Charts showed that
more declines were likely.
Investors are worried that although
central banks around the world have
announced more or less unlimited
money printing plans, its not actually
gaining traction. This is possibly keeping
government bonds out of trouble, but
not stimulating growth, said Felicity
Smith, fund manager at Bedlam Asset
Management, which manages about
There are also worries that the
European Central Banks willingness to
buy bonds is dependent on countries
like Spain actually asking for help. And
so far they have shown reluctance to do
so as they know that any request for aid
will bring another round of austerity.
As protesters stepped up anti-austerity
demonstrations, Spanish Prime Minister
Mariano Rajoy prepares to present more
painful economic reforms and a tough
2013 budget on Thursday to show that
he is trying his best to contain the debt
Analysts said that continuing
problems in Europe, poor progress in US
economic recovery and a slowdown in
China - the world's second-biggest
economy and a major commodity
consumer, had been preventing the
global economy from gaining
momentum, hurting growth-linked
equity sectors such as banks and miners.
The UK mining index fell 2.8 per cent,
banks were down 2.7 per cent and the
oil and gas sector was off 1.5 per cent.
Stocks such as Lloyds , Barclays, BP and
Rio Tinto fell 1.7 to 4.2 per cent.
We are now entering the phase
where we are dealing with the tangibles
and the intangibles. The intangibles
relate to the stimulus and questions are
being asked whether this should have
the desired effect. Whereas the tangibles
relate to the stalling economies and
higher incidence of profit warnings,
Paul Kavanagh, chairman and partner at
Killik Capital, said.
I believe the markets will become
more emotive over the next few weeks
which should increase volatility rather
than overall direction of financial
Charts showed that the FTSE 100
failed to breach the 5,940 resistance area
and has entered a correction phase.
Dmytro Bondar, analyst at RBS, said
the index had broken several key pivot
points including the 50-day moving
average and a 23.6 per cent retracement
from the June-September extremes,
suggesting there would be more
downside towards 5,690-5,670 the area
of the 38.2 per cent retracement and its
200-day moving average.
Analysts said investors had become
cautious on high beta stocks a
measure of a stocks volatility in relation
to the market as a whole such as
banks, which recorded strong gains
recently, but their earnings prospects
had not improved.
Growth concerns drive FTSE 100 to
lowest close since early September
Drax Group PLC
20Sep 21Sep 24Sep 26Sep 25Sep
p 530
26 Sep
Credit Suisse has upgraded the power station operator from
underperform to neutral and upped the companys share price
target to 475p, saying its recent price drop has improved the value of
the UKs worst-performing utility stock. We think we are getting close
to tight reserve margins, hence higher power prices in the UK, and we
no longer want to short the stock here, Credit Suisse said.
20Sep 21Sep 24Sep 25Sep 26Sep
26 Sep
To appear in CITYMOVES please email your career updates and pictures to
in association with
Hargreaves Services PLC
20Sep 21Sep 24Sep 26Sep 25Sep
p 725
26 Sep
Westhouse Securities has lowered their price target on the mining group
to 660p from 893p reflecting uncertainty over the shares following
Hargreavess results on Tuesday, in which the firm announced it had
discovered gas leaks at the Maltby Colliery coal mine. However,
Westhouse said it remained a buyer of Hargreaves, adding that the leak
will allow greater focus on stronger growth areas at the firm.
20Sep 21Sep 24Sep 26Sep 25Sep
p 875
26 Sep
Investec has upgraded the advertising giant back to buy from hold
and raised the target price by 100p to 950p. WPP is now the only large
cap agency play for UK investors, so by default becomes even more
important and attractive post [the sale of Aegis to Dentsu], Investec
said, adding that while WPPs growth in the second and third quarter of
the year had been disappointing, it was still growth.
OR Republicans, the daily
polling page on the
RealClearPolitics website
makes for dismal reading.
Democratic blue adorns each
swing state poll, with Barack Obama
markedly ahead in Ohio. At this
stage, some didnt even expect the
President to be competitive in North
Carolina. Instead, he finds himself
up and outside the margin of error.
Mitt Romneys campaign has assured
supporters that its internal polls
make for more sanguine reading.
The Republican candidate is,
however, still losing.
Romney has come under intense
scrutiny from conservatives for the
direction of his campaign. Polls
repeatedly show that voters see this
E ARE on the brink of a
revolution in workplace
pensions. From 1 October,
new laws designed to
address the dramatic
decline in long-term saving will force
all employers to provide pensions for
their staff. Employers will
automatically enrol them, and
employees will have to opt out if they
dont want to contribute to pensions.
Initially, the policy will cover the
largest firms. But, by 2018, every single
employer must have a pension scheme.
Even working mothers will have to pro-
vide pensions for their nannies.
Eventually, at least 8 per cent of salary
(4 per cent from employees, 3 per cent
from the employer and 1 per cent from
tax relief) will be put into a pension
fund each month, unless the worker
opts out.
It is certainly important to rebuild a
retirement savings culture. Recent fig-
ures reveal that the number of workers
in company pension schemes has
plunged to an all-time low.
The government believes most work-
ers will stay put after auto-enrolment,
Even working
mothers will have to
provide pensions for
their nannies by 2018
Twitter: @cityamforum on the web: or by email:
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

Auto-enrolment will fail unless it
fosters a broader savings culture
and that millions more will have pri-
vate pensions in future. I would love to
see such a bold reform succeed, espe-
cially as it is likely to cost employers
huge amounts of time and money. But
I fear that it fails to address some vital
issues for reviving retirement savings.
The pensions crisis has been worsen-
ing for years. Confidence and trust in
pensions has been battered, and many
recent retirees have found that their
pension savings failed to deliver the
incomes they expected. Disappointing
investment returns, excessive charges,
plummeting annuity rates and several
scandals have all taken their toll.
And, unfortunately, there are many
low earners for whom pensions are
not an appropriate savings product
because the current state pension sys-
tem penalises private pensions. The
means-tested pension credit, to which
nearly half of all pensioners are enti-
tled, takes away much or all of many
peoples pension income. This funda-
mental flaw in the UK pensions land-
scape must be fixed quickly, if
auto-enrolment is not to end up as a
massive pension misselling fiasco.
If automatically enrolled workers
reach retirement, and find their pri-
vate pension savings leave them no
better off because of state pension
rules, they will blame the government
for wasting their savings. Without rad-
ical state pension reform, it is not safe
to automatically enrol all low earners
into a pension scheme, unless they are
warned that they may be better off sav-
ing in a different form like an Isa. But
there are no plans to offer advice or
risk warnings to low earners. And, if
they were properly warned, they
would likely decide to opt out, thereby
undermining the policys objectives.
There is also a danger of people feel-
ing a false sense of security that they
are covered for later life, just because
they are putting something into a pen-
sion. In fact, the minimum contribu-
tions required for auto-enrolment will
nowhere near cover most peoples
retirement needs.
Pensions and investments are com-
plicated. Most people will need some
help to choose their investments and
monitor their fund over time, to see
what income they may be on track for.
How will they do this without advice?
Auto-enrolment may go some way to
solving the pension crisis, but it is not
the best approach. There is an impor-
tant difference between encouraging
people to save for retirement, and forc-
ing them to contribute to pensions. A
pension is just one financial product
and it is the most inflexible.
Many may be better off saving for a
house, or repaying debts. But, if they
choose to save for other purposes, they
lose the employer contribution and
tax relief.
Auto-enrolment could work much
better by allowing more flexibility.
Including Isas or student debt repay-
ments as part of workplace saving, or
by making pension funds partially
accessible, we could help generate a
more active savings culture. Of course,
the pensions industry wants to earn
fees on captive money that cannot be
touched for decades. But kick-starting
a broader savings culture among
young people is just as important as
encouraging pensions saving.
In uncertain financial times, it is not
surprising that many workers are
unhappy to put their money in a
locked box that they cannot open for
decades. As long as policymakers
believe that it has to be pensions or
nothing, when it comes to long-term
saving, many people will be left with
Ros Altmann is director-general of the
Saga Group.
as a choice between two candidates,
rather than a referendum on
Obama. Yet the Republican
continues to struggle to convey how
he would take the country forward.
The airing of his ill-advised 47 per
cent remark last week was hardly
the catalyst, but the culmination of
conservative anxiety that this
election is slowly slipping out of the
Republicans hands. Some are
offering their sincere counsel to help
their party. Others so they can
proudly refer to their prescience in
the event of a Romney defeat on
election night.
The current state of the race
appears to leave the Republican at
the mercy of what Harold Macmillan
allegedly labelled his greatest fear:
events. Presidential elections are
often said to be decided by them
surprises that put on public display
a candidates erratic behaviour or
their ability to demonstrate grace
under pressure. Perhaps to Romneys
advantage, he is facing an
incumbent whose administration
appears incapable of being honest
with the American people, following
momentous foreign policy events.
The President is now receiving
growing criticism for his
administrations handling of the
violence across the Middle East,
especially the circumstances
surrounding the death of the US
ambassador in Libya. Like its cack-
handed and heavily politicised
response to the killing of Osama bin
Laden, the administration has issued
mixed messages. It has dubbed the
attacks spontaneous not a
premeditated response, denied they
had actionable intelligence, and
have pinned the entire blame on
what was an obscure and deplorable
anti-Islamic film. It has all the
hallmarks of bureaucratic
incompetency or, at worst, a cover-
up. Is this debacle a sleeper issue?
Just as voters would react negatively
to a terrorist attack on US interests,
they are likely to punish those who
deliberately mislead them.
This election is certainly not over.
But given that Romney has one
realistic path, compared to Obamas
three or four, to the magic 270
electoral college votes, pessimism is
growing. The first debates start next
Wednesday duels that often end in
boring scoreless draws. Events might
well dictate the outcome of this race.
But, if he hopes to enter the White
House as its new occupant in
January, Romney needs to go for the
Ewan Watt is a Washington, DC-based
consultant. Follow him on Twitter
Events, dear boy, events: Romneys last hope of ousting Barack Obama
In association with
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email or comment at
Clegg on housing
[Re: The ideas emerging from Lib Dem
conference dissolve under scrunity,
Nick Clegg, and the coalition more broadly,
are failing to pursue sufficient supply-side
reform in the housing sector. The reason
approved sites are lying idle is because the
current planning system limits supply. The
really big money is to be made in getting
planning permission. It lifts the value of the
land, and money can be made without
developers having to invest in any actual
construction. The only effective way to deal
with this situation is to introduce more
competition into the housing market. This
means removing impediments to
developing rival sites.
Real austerity
[Re: Fiscal crisis continues to threaten our
struggling economy, yesterday]
The coalition is doing its best to deceive the
markets, but growing debt will have a wider
negative impact on growth. Its important
that this is realised. Many are convinced that
austerity is enough if it convinces the bond
markets that the UK can pay its debts. But
we must understand that excessive
spending (whether on debt interest, or
otherwise) is crowding out future prosperity.
The few savings the coalition has made are
coming from the wrong places. Whats the
sense in ending road building if the money is
then splurged on welfare payments?
IGHER taxes and higher
spending are associated
with weaker economic
growth. That is the clear
conclusion of a wealth of
increasingly sophisticated studies
conducted over decades.
The final report of our 2020 Tax
Commission summarised 18 studies
from the 1970s, which found higher
spending or higher taxes diminished
the level or growth of national
income. From David B Smiths 1975
paper, Public Consumption and
Economic Performance, which looks
at 19 industrialised countries over
the period 1961 to 1972; to Antnio
Afonso and Joao Jalless 2011 paper,
Public Sector Efficiency, which stud-
ies 145 countries over the period
And borrowing the money doesnt
mean a free lunch. Higher spending
inevitably drives down the ratio of
private capital formation to national
output, switching resources from
business start-ups and expansions to
bigger government programmes. It
therefore reduces both the level and
growth of national income, by get-
ting in the way of the productive
investments that embody innova-
tion in new projects, new equipment
and new companies.
You can see this pattern in the
effects of specific taxes. In an OECD
working paper, Tax and economic
growth, Asa Johansson and others
looked at how top marginal rates of
tax on labour income reduces pro-
ductivity growth. High taxes dimin-
ish the returns to entrepreneurs and
thereby stop the exciting new busi-
nesses that are the key to a more pro-
ductive economy.
But, despite this research, none of
it will get in the way of those desper-
ate to find an economic case for
higher taxes and higher spending.
Of course, no academic literature is
What is surprising about Libor is that such a
deeply flawed model was able to continue
unchecked for so long.
The British Bankers Association has given up
Libor. Its realised it cant both act as a body
for bankers, and police Libor rate setting.
There are still huge political risks to the
resolution of the Eurozone crisis. A break-up
of Spain is just one of them.
The Lib Dems are gloating that theyre in
power, but denying responsibility for any
bad decisions made under their watch.
As reform of Libor begins, can London retain
its dominant role in the interbank market?
Martin Wheatleys Financial Services Authority (FSA) report into
Libor will reportedly result in a regulated, transaction-based
replacement system. The British Bankers Associations (BBA) role
will end. It is good that Wheatley is set to move swiftly and in the
right direction this change is not before time. This week, my firm
published its twelfth report into the relative competitiveness of the
worlds financial centres, and London retained the top spot just.
But the Libor scandal noticeably eroded trust in London as a
financial centre. The good news is that rival benchmarks like
Euribor, Jibar and others currently also use flawed Libor-like
methodologies. So, if London takes the lead and makes rapid
progress towards a demonstrably fairer system, it can repair that
trust. And Wheatleys report should be a very welcome first step.
Ian Harris is managing director of Z/Yen Group and co-author,
with professor Michael Mainelli, of The Price of Fish.
Ian Harris
Andrew Lilico
Its forlorn to hope that, by replacing Libor, London can recover its
lost reputation in the interbank market. London wholesale financial
services, legal services and others have gained immeasurably from
centuries of global reputation for integrity the honour of an
English gentleman; my word is my bond; as safe as the Bank of
England. With the Libor scandal, that has been replaced with a
global reputation for sharp practice. That problem cant be solved
by replacing Libor with some other index, for it wasnt some
technical detail of the calculation method that was the problem; it
was the systemic lack of probity. Our only way back is to build
again, being prepared to keep our promises even when thats
painful. We must enforce contracts, enforce responsibility, keep
inflation low, pay our debts, and wait for our international
reputation to recover.
Andrew Lilico is chairman of Europe Economics.
In the real world
high taxes restrict
economic growth
ever finished and there are limita-
tions to any econometric study.
Economists cant run experiments
on economies in the way that physi-
cists can run experiments in a labo-
ratory. Experimental economics is
important, but often limited to nar-
row decisions far removed from the
complicated world in which eco-
nomic decisions are normally made.
But that is no excuse for ignoring
all the careful studies. Nick Pearce,
director of the Institute for Public
Policy Research (IPPR), a major think
tank, recently wrote on its website
about a new paper, Taxes and the
Economy, from Thomas Hungerford
in the US Congressional Research
Service. It uses data from one coun-
try, the United States, and produces
a simplistic time series, which sug-
gests that high taxes on high earners
have no effect on economic growth.
Never mind that it might be easier
to grow when your industrial com-
petitors are rebuilding economies
left in smoking ruins by the Second
World War. And never mind that
this data would have been a part of
the far more sophisticated studies
that have come to a different conclu-
The IPPR thinks the study is grist
to the mill for the debates on the
chancellors forthcoming autumn
statement. However, the rest of us
have to live in the real world where
higher taxes and spending are associ-
ated with weaker economic growth.
Matthew Sinclair is chief executive of the
TaxPayers Alliance.
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SKYB set out to build the
most ecologically
sustainable broadcasting
complex in Europe it did
not want to merely build a
monument to the Sky brand.
Instead, BSkyB was after a building
that would allow it to change and
grow. Sky Sports News was to be
the first, and largest, studio to go
on air from the new building. It
was also to serve as the pathfinder
for everything that followed,
highlighting the gravity of the
As project managers, we were
responsible for developing the
technical brief with Sky and
working with its creative team; as
well as working with the
architects Boulter Kalitowski to
achieve the required aesthetic feel.
Even as the building was
nearing completion, the brief was
constantly evolving. Projects like
this can often change mid-project
in order to accommodate the high
standards that were demanded by
everyone involved.
It was abundantly clear from the
outset that the technical demands
for the main furniture elements
were going to be a complex
challenge. To create the
organically flowing curves each
desk required its own unique
shape, making them part of an
enormous jigsaw puzzle.
Getting the desks right was one
of the most critical elements of
the studio construction, as this
would support the 350 computer
monitors and 100 kilometers of
data, coax and power cabling. We
needed a manufacturer with the
in-house capability and the
technical know-how to guarantee
K+N were selected because it had
the necessary experience to take
on a project of this magnitude.
The company worked closely with
the team to interpret the designs
and ensure that the final product
delivered value. It produced two
mock workstations: one was
installed in the new Sky Sports
newsroom to see how it appeared
on camera, the other was built in
Skys technical centre, where it
was tested rigorously by the
eventual end-users. K+Ns
technical department used the
information from testing to
produce a final prototype.
Due to the enormity of the
project, the final programme of
delivery was incredibly tight. But
in the end, as the newsroom was
pieced together, all areas of the
project from the under-floor
services, provision of technical
cabling, air conditioning,
streamed monitors, control desks,
edit suites, the presenters desk,
cameras and lighting were all
delivered according to plan.
The launch date for the new
studio was set, however, it involved
shutting down the old Sky Sports
newsroom overnight before going
live in the new studio at 6am the
following morning. Months of
preparation, testing and dry runs
ensured the transfer to the new
studios was smooth. Thanks to the
efforts of all those involved it was
all completed on time.
The end result was a fantastic
studio buzzing with activity and
purpose, bringing the latest sports
news to fans across the world. The
switch-over was seamless, and
Kirsty Gallagher was the first
presenter to broadcast from the
new studio, presenting the show
Good Morning Sports Fans.
Trevor Mott is a managing partner at
TMC/MAG, an office planning and prop-
erty consultancy
Take advantage of our free product trial,
Why not try out the K+N range of chairs
Delivering a project of this scale
requires a meticulous approach
EDIA company BSkyB
approached K+N to work
with it on the design and
implementation of its new
studio space for Sky Sports News.
The privately owned furniture
company was founded in 1925 and
has grown to become the largest
manufacturer of office furniture in
The sports channel, along with a
number of other Sky brands, were
relocating to a brand new, state-of-
the-art production facility in
Isleworth. Sky Sports News was to be
the first channel to go live in the
new facility. So K+N had its work cut
out: the pressure was on.
BSkyB appointed architects
Boulter Kalitowski and project
managers TMC/MAG to assist with
the relocation efforts. As Sky
Sports News broadcasts 24 hours
a day, seven days a week, the
move was always going to be a
tough challenge. The timing of
the move was also critical. The
project teams had
absolutely no margin
for error: there was
no opportunity for down-
time or second chances
if something went
Key to the design
was the curved, free flow-
ing nature of the newsroom
desks. K+N were tasked with supply-
ing the desks and chairs for the new
studio. Colin Titlow, managing
director of K+N, worked
with TMC/MAG in
understanding the
brief and delivering
the solution. This
was a very exciting
and interesting proj-
ect for us, says Titlow,
we worked with our
specialist team based at
our production facility
in Germany to develop a
solution that matched the
thorough and demanding
brief. Boulter Kalitowskis
design meant that every desk was a
one-off. The upshot was that K+N
had to design and manufacture 69
unique desks that were linked
together and fitted on the site.
The challenge was made more dif-
ficult by the fact that K+N had a
tight timescale to
work to. Titlow
says: We were
given a date to
deliver and
were informed
that if we
missed the
agreed date, the
studio would
not go live.
To speed up
the process,
all desks were
delivered direct-
ly from K+Ns
1.5m square
foot manufac-
turing plant in
Frankfurt, and
each one was num-
bered to allow easy installa-
Seating was a
critical aspect
of the proj-
ect. Chairs
were not
Sky is the limit of fine design
only required to be ergonomically suit-
ed, but they also had to have the right
visual impact so that they looked good
on camera. After extensive testing,
both on and off camera, Sky ultimately
decided that the ideal choice was the
K+N Signeta chair (pictured, left).
The objective of this project was also
to create a fantastic work environment
for the Sky staff. Titlow concludes:
The working environment needs to be
a motivating place to work. Over the
years, we have developed a proven rep-
utation for delivering quality office
environments. A happy workplace is
usually a good looking workplace,
which K+N can always help with.
Months of testing
and dry runs ensured
the transfer to the new
studios was smooth

K+N International relished the
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for the new sports studio
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& furniture in your offce before buying?
Facts about Sky Studios:
nSky Studios went live on 4 July 2011.
Building work started in 2006.
nThere is office space for over 1,370
nThe first channel to be broadcast
was Sky Sports News and the
programme was Good Morning Sports
nThe studios are arranged over five
levels. Each level is the size of a
football pitch.
nThere are five HD studios, 45 editing
suites, 14 voice-over suites and four
audio suites.
nThe building has been split
horizontally into three zones: make
(content production), shape
(platform control) and share
nThe facility includes an integrated
wind turbine, on-site combined
cooling and heating power plants,
which supply at least 20 per cent of
the energy needed for the buildings
electricity and heating systems.
nSky claims that the studios are the
most sustainable broadcasting facility
in Europe.
nSky Studios won Sustainable Project
of the Year at the 2010 Sustainability
Awards and Most Sustainable
Construction Project 2011.
n Rainwater is harvested from the
roof and is recycled to flush toilets and
n There is a self-regulating computer
lighting system to save electricity.
studiohas styleandsubstance
In association with
Ask the experts
Getting the right
advice is crucial
Due diligence
How virtual data rooms are
speeding up the process
Take your time
It is important to think
about long-term goals
Be prepared: Any company considering entering the complex
world of M&A must have a robust stategy in place
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he M&A landscape
may be quieter than
it was a few years
ago but the annual-
ised pace of deal ac-
tivity in the rst half
of 2012, according to
leading industry research, was still
more than $2.2 trillion globally.
This is down considerably on
the peak of $4.7 trillion record-
ed during 2007, but it remains a
healthy number considering the
damage to business condence
following the nancial crisis and
remains almost double the low of
$1.2 trillion in 2002.
Cash rich
With companies sitting on
huge cash reserves, recently
estimated by JP Morgan to be $5 tril-
lion,there are certainly funds avail-
able in the market to pursue deals
over the next couple of years as the
economy improves. M&A will al-
ways be the principal tool to achieve
fast-growth corporate strategies for
many organisations. A recent study
at Cass Business School showed
that rms using their excess cash
on acquisitions outperform those
who used that money to pay down
debt or who increased dividends.
Acquisitions succeed more of-
ten when they are in related busi-
ness areas than when they are for
diversication into new areas. It
is essential the board of directors
makes sure this happens.
According to another piece of
research by Cass Business Schools
M&A Research Centre, CEOs who
perform a major deal during their
first year in office outperform
their peers in the long run who
dont. But watch out: too much of
a good thing doesnt work,because
those CEOs who did more than
one deal in their rst year per-
formed worse than those who did
nothing or just one deal.
Dont rush
Why are opportunistic, hasty
acquisitions less successful?
Not only are these transactions of-
ten not in sync with the organisa-
tions long term goals but the bid-
ders fail to undertake vigorous
and deep due diligence. This is
true of companies of all sizes, but
M&A levels healthy
despite dip in con dence
As the economy improves, M&A activity is poised to
accelerate as companies hungry for growth loosen their
purse strings and hunt out deals.
A VDR is ideal if the
business being acquired
and the bidder are
geographically separated
and there are signicant
time differences
Richard Hoyle
Managing director,
Greenhill and
Managing Director: Chris Emberson
Editorial and Production Manager:
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Business Development Manager:
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Responsible for this issue:
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has particular relevance for SMEs
looking to sell.
Selling a company is not what
owner-managers are typically best
at,so it is important to bring in the
M&A experts early. These advisers
will prepare the nancial informa-
tion for bidders and use market in-
telligence to identify who the right
buyers might be and, for example,
determine if a sale should be pri-
vate or by public auction. A virtual
data room for the due diligence will
also speed up the process,especial-
ly if one of the parties involved is
based overseas.
Be prepared
Preparation is crucial be-
cause any company sale pro-
cess will be disruptive and dis-
tract key people within the organ-
isation from their day job, risking
a negative impact on sales and
prots at precisely the time when
the company needs to show strong
nancials to potential bidders.
Lastly, we are in a period where
M&A regulation is increasing
around the world.There have been
changes to the Takeover Code in
the UK within the past two years
whilst developing countries are
adopting new regulations to make
their markets more attractive for
deal activity.
M&A can be intimidating for
many companies,especially SMEs,
but with the right advice, deals
that bring value to everyone in-
volved can be secured.
Scott Moeller, Director, M&A Research
Centre and Professor in the practice of
nance at Cass Business School
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Plan your success
Any company considering enter-
ing the complex world of M&A
must have a robust strategy in
place which reflects the business
goals and removes the tempta-
tion to act opportunistically.
Dr Roger Barker, Head of Cor-
porate Governance at the In-
stitute of Directors (IoD), says
a companys board of directors,
particularly the CEO, must take
full responsibility for devising
the M&A strategy and not leave
it to management.
There will be times when man-
agement wants to act in an op-
portunistic way which is fine if
the acquisition targets identi-
fied are within the agreed long-
term strategy for the business,
he says. A clear M&A strategy is
one way to achieve the organisa-
tions goals over a period of time.
Barker sits on several corpo-
rate governance advisory boards
and says that since the financial
crisis many organisations have
reassessed their appetite for
risk. The board must decide
whether the M&A strategy is
consistent with the risk strategy
and aligned
with what
ers want
and expect
the board to
do to achieve the corporate ob-
jectives, he says. The board
might need to consider less fi-
nancially risky alternatives to
reach its goals. This could be or-
ganic growth, expanding into
new geographical markets or
diversifying into new products
and services.
Know the market
Market intelligence can be
crucial for identifying poten-
tial buyers and acquisition
targets. It will demonstrate,
for instance, where syn-
ergies exist, whether
companies can comple-
ment each other or if
there are over-lapping
areas that following a
merger or acquisition
would bring econo-
mies of scale and the
scope for cost-cutting.
A lot of companies
will be approached by
M&A advisers from
investment banks
who will pitch ideas
to them and the case
for a particular trans-
action. This provides the board
with fantastic business intel-
ligence, says Barker. Busi-
nesses that are very proactive
when it comes to M&A often
employ full time corporate fi-
nance professionals to gather
market information,while small-
er firms should have regular con-
versations with city analysts.
Expert advice
The IoD provides general M&A
advice and Barker says any board
considering a transaction must
be aware that many deals do not
work. Corporate tie-ups that ini-
tially appear attractive can fail
to add the value expected,
while the process of bring-
ing two cultures togeth-
er and integrating various
processes can be complex
and costly.
The board must think care-
fully about the rationale for any
transaction and whether it has
the expertise and experience to
make it work so they can create
a workable new business model.

Dr Roger Barker is co-author of the IoDs
guide to the role of the board, The Efec-
tive Board published by Kogan Page.
Without a clear strategy
M&A activity can fail to add
the value that everyone
expects, especially if a deal
is ill-thought-out or the
board lacks the experience
to make it work.
Dr Roger Barker explains
the importance of knowing
the market and planning
an effective M&A strategy
The board might
need to consider
less nancially
risky alternatives
to reach its goals
Dr Roger Barker, Head of Corporate
Governance, Institute of Directors
Be prepared
Daniel Domberger, Director
at corporate financiers
Livingstone Partners, says
preparation is vital to any
successful company sale.
To achieve the highest valuation
when selling a business,an own-
er must plan for and address ear-
ly on any potential issues that
might deter would-be buyers.
For example, make sure key
contracts are up-to-date and
signed, and that you dont have
a big renewal or renegotia-
tion coming up. Key employ-
ees should be incentivised and
locked in not with vague
promises, but properly docu-
mented bonuses or share op-
tions. Some of this might re-
quire re-writing legal agreements,
which takes time,so start early.
Any owner who wants to leave
once a deal is completed must
demonstrate that there is a strong
management team in place. Find-
ing and recruiting good people
cant be done in a rush, so early
preparation is key.
Ideally, an entrepreneur should
start talking to a corporate nan-
cier perhaps two years before they
intend to sell not necessarily for-
mally to appoint them,but to start
the dialogue. Building this rela-
tionship means entrepreneurs are
kept informed of the M&A trends
in their sector, whats hot and
whats not, and can benet from
experienced advice on potential is-
sues and obstacles to a sale.
M&A activity has slowed over
the past few years, but good deals
are still being done. This means
that it is essential for SMEs to be
well positioned and well prepared.
Strong and exciting businesses are
still in demand and securing high
valuations, but purchasers are
looking for companies they must
have rather than those theyd like
to have. For businesses which are
under-prepared and poorly-posi-
tioned,there might not be a buyer
at all; but for strong and attractive
businesses, acquirers arent bar-
gain-hunting theyre willing to
pay full value.
Daniel Domberger
Director, Livingstone Partners
Were hardly experiencing the heady,
pre-2008 days of M&A activity, but
theres still plenty of evidence that a
signicant number of companies are
involved in,or planning,deal activity.
In the rst half of 2012,global M&A
activity reached US$1.1 trillion dol-
lars. And UK-based companies were
involved in a substantial 200 billion
dollars worth of these deals.
But just because theres money
available it doesnt mean its easy.
There are many indications that
deals are currently harder to com-
plete.Theres also a strong view that
the number of appropriate target
companies is currently consider-
ably reduced.
So acquirers, and their advisors,
are having to be more creative when
looking for, and selecting, targets.
Were seeing more interest in the ac-
quisition of mid-market companies
and in smaller private companies.So
if the universe of target companies
is shrinking, and many of the po-
tential good buys are under the ra-
dar, theres more pressure on M&A
professionals than ever before when
compiling and selecting targets.
Its even more difcult if youve
identied emerging markets as part
of your strategy. Finding informa-
tion on companies you know about
in these regions is hard enough,
never mind identifying target com-
panies youre not yet aware of.
Combine these issues with the fre-
quency of deals apparently stalling
for a range of reasons and its clear
that its never been more important
to take the research part of the acqui-
sition process very seriously; the con-
sequences of not doing so are obvious.
The starting point is exploring
potential options and identifying a
broad range of target opportunities
which need to meet relevant crite-
ria. These potential targets could
come from a variety of sources, in-
cluding internally sourced targets,
known competitors and suppliers,
plus companies that are strategical-
ly interesting because they ofer you
potential in new geographical mar-
kets or product ranges.
Google is most peoples starting
point when they need information.
Type in a company name and youll
get almost instant access to its web-
site and instant, useful knowledge
about the company. This is an ef-
cient, excellent resource and all our
lives are enriched by such innovation.
But the merits and disadvantages of
using the internet as a professional
research tool are well-documented.
The results and data are unstruc-
tured and much will be irrelevant.
Financial performance wont neces-
sarily be reliable or available at all on-
line for smaller and/or private com-
panies.If available,it will certainly be
provided in a myriad of formats mak-
ing it very difcult to do a peer anal-
ysis. You can waste a huge amount
of time trying to identify pertinent
pieces of information about your tar-
gets,and may end up with very little.
Even more importantly its very
hard to nd out what you dont know
using the internet. Putting a list of
companies together via a list of cri-
teria is almost impossible,especially
if theyre not high prole companies.
Its unlikely youre going to stumble
across the hottest acquisition target,
that no one else has found,and then
have enough intelligence on it to be
able to validate it condently.
Specialist information providers
can provide a range of intelligence
such as company news, public com-
pany nancials,private company -
nancials, corporate structure plus
historical and rumoured deal infor-
mation.Using professional informa-
tion sources will not only expedite a
search for relevant information but
also ofers an independent view,and
with it a higher degree of accuracy.
But what should you be looking for
in a resource to help you nd targets
more creatively and more efciently?
The breadth and depth of the
coverage of the data on ofer from
the provider is the rst important
thing to consider. The more exten-
sive the data set is, the more com-
prehensive your search can be.
Whats the coverage of private com-
panies and how consistent is the
coverage in diferent regions? Are
the nancials provided in a sensi-
ble standardised format to help you
search and compare companies
across borders? Can you research
historical deal data efectively?
Obviously, the timeliness and
quality of the data are also key. It
goes without saying that nancial
due diligence will be irrelevant if
its carried out on inaccurate or out
of date nancials,or if the deal mul-
tiples used to base the pricing strat-
egy are inaccurate.
Look for a good level of detail
around what a company does. Be-
ing able to search for companies by
a range of key words and activity
codes, encompassing niche sectors,
helps you build your prospect lists
impressively quickly, and helps you
nd potential targets that are per-
haps not that obvious but could of-
fer excellent potential.Knowing who
already owns a company is vital,and
you should also be able to identify the
type of owner are they an individ-
ual,a private equity company or oth-
er investment vehicle,or a corporate?
But its not just the data; software
is also important. Using good intel-
ligence alongside good functional-
ity signicantly improves efcien-
cy and decision-making processes.
Does the providers product ofer
sufcient scope for creating rele-
vant and specic target searches?
Can you use search criteria in any
combination and include more lat-
eral options such as nancial trends
as well as the nancial variables, or
the position in the corporate fami-
ly? Such options are vital in saving
time and delivering accurate results.
You should also be able to create
comprehensive peer analyses and
build reports highlighting compara-
ble nancial performance to help you
rene your list quickly. These tools
can also help you arrive at initial valu-
ation ranges using a variety of meth-
ods.And any potential targets should
be monitored,with products alerting
you to new intelligence that could af-
fect your selection process.
Given the time and investment
that goes into a successful M&A
strategy, and the potential rewards
in improving shareholder value of
the back of it, its important to rec-
ognise that implementing profes-
sional data products can be an ex-
cellent starting point in helping you
achieve your goals.
Lisa Wright is head of M&A
products at Bureau van Dijk,
the worlds leading provider
of global private company
nancials and M&A deal data.
BvDs products include Orbis
and Zephyr.
Visit BvDs
for a range of M&A reports and
Finding deal targets in
todays environment
Head of M&A products, Bureau van Dijk
How market intelligence
can improve your accuracy
and efficiency when
researching targets.
Lisa Wright
Head of M&A,
Bureau van Dijk
Lisa Wright of Bureau
van Dijk discusses the
importance of attaining a
good level of detail around
what a company does
Richard Hoyle has used virtual
data rooms (VDR) for 10 years to
speed up the buying and selling of
UK and multinational companies.
The Managing Director of
Greenhill and Company and for-
mer Credit Suisse First Boston
M&A expert, says VDR technol-
ogy can save tens of thousands of
pounds on the cost of doing a deal.
It cuts weeks of the transaction
process because it eliminates al-
most completely the need to print
out and send large volumes of doc-
uments around the globe.
A VDR is a password-protected
extranet containing all the nan-
cial and business-related docu-
ments that people involved in the
deal might need to access during
the due diligence process. There
are strict controls over who can
enter the room and when during
this crucial screening process as
bidders identify any potential is-
sues and assess the real value of
the deal.
Seeing it in action
Greenhill is using a VDR from sup-
plier Sterling XAG for the 3.2bn
sale of its client Aegis, the glob-
al media and digital communi-
cations agency, to Japan-based
Dentsu Inc,Asias largest advertis-
ing group. Aegis has a presence in
80 countries and saw a 20 per cent
revenue growth in 2011.
The bigger the deal the great-
er the number of people who need
access to the data and physically
it would be hard to accommodate
this in a condential and secure
way, says Hoyle. A VDR is ideal if
the business being acquired and
the bidder are geographically sep-
arated and there are signicant
time diferences. It means a deal
can be done as quickly as people
can review the information.
Scanned data and existing elec-
tronic les are mixed in the vir-
tual room and amendments to
the information can be made and
logged while any data can be re-
stricted to particular individuals
at any time.
Hoyle is a long-standing advis-
er to Aegis having worked on the
agencys 210m purchase of Aus-
tralian ad rm Mitchell Commu-
nications and the sale of mar-
ket researcher Synovate to Ipsos.
VDRs were used on both occasions
to make the sale and completion
process more efcient.
A VDR works when you have
limited time, especially following
amendments to the UK takeover
code last year which introduced
the put up or shut up regime.
Now bidders have only 28 days to
launch a bid or walk away so if we
can save one or two days it can be
the diference between success
and failure.
Overcoming the challenges
Hoyle has seen VDR technology
improve signicantly during the
past decade but he says there are
still some challenges. There can
be issues with diferent IT set-
ups around the world and people
not being able to open documents
because they are using diferent
browsers or companies have dif-
ferent security permissions, he
says. Also, in some industries the
adoption of VDR has been slower.
In oil and gas, bidders still want to
see detailed environmental impact
studies which are not as easy to di-
gest using a virtual system.
Richard Hoyle
Managing director,
Greenhill and
Question: How do you
design an M&A due diligence
process which saves time and
money but remains secure and
condential for parties based
around the world?
Answer: Use a virtual data
room to store documents.
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The password-protected
extranet is used to store
and transfer data securely
and efficiently
In your view, how can
companies undergoing M&A
ensure their due diligence
process is delivered in a cost and
time effective manner?
It is important for any company em-
barking on any M&A process that they
consider using the best virtual data
room (VDR) product available.
Companies should consider a product
that ofers all stakeholders a good bal-
ance between security,speed,functional-
ity,cost,ease of use and customer service.
Choosing the VDR provider on cost
alone is often a false economy as typical-
ly such products may lack the levels of se-
curity, functionality, sophistication and
customer service desired.
This shortfall can increase the time
spent using and managing the data
room and thus increase the opportunity
cost of the overall process.

With numerous technologies
available to manage the M&A
process, how do VDRs differ from
other platforms available?
Dedicated virtual data room platforms
are built with the focus on addressing
the critical needs of all participants in
the M&A process.
VDRs ofer not only the comfort of high
security,privacy and condentiality,ma-
ny platforms also ofer the vendor team
a comprehensive suite of administra-
tion tools that allow user privileges and
document permissions to be dened at a
granular level, real-time reporting tools
that provides detailed insight into buyer
interest,integrated Q&A tools,and on-de-
mand 24/7 customer service.

According to your experience,
what are the most important
features of a state of the art
virtual data room that can
ultimately benefit the user?
First, the VDR has to be technically se-
cure and protect the companys docu-
ments to the highest possible encryp-
tion level available.
Secondly,the technology should be in-
visible to users and not hinder the pro-
cess. The platform must be technically
seamless to the end-user and not impose
technical delays and obstacles to access
the materials such as the need to install
security plug-ins. The platform should
also be easy to use, allowing all users to
quickly work out how to browse, search
and nd the relevant materials for their
due diligence exercise.
Thirdly, great technology should be
supported by great service. When com-
panies and advisers are under increasing
pressure to get the deal done,it is impor-
tant to remember even with the very best
VDR technology available it is essential
that the participants know they have the
safety net of a service provider that ofers
excellent customer service and support
on a 24/7/365 on-demand basis.
What, in your opinion, is the
most important step that can be
taken when preparing strategy for
a merger or acquisition?
Information is vital and empowers an
M&A strategy; the most immediately ob-
vious targets arent always the best.Good
intelligence helps you nd targets using
more criteria,and more condently.Cre-
ating a good list of relevant and strategi-
cally appropriate targets is essential and
being able to create this list efectively is
a key advantage. Good intelligence also
means you can rene your list efciently,
and ultimately arrive at the most appro-
priate target(s).
A great proportion of M&As fail
to achieve the expected value.
Based on your experience, what
can be done to pre-empt and
avoid mistakes that jeopardize
In M&A, one plus one doesnt necessar-
ily make three,or even two,and initial re-
sults can disappoint.A clear integration
plan, that includes contingencies, and
the best team you can have working on
it,will go a long way to help and should
be a priority. But realistic expectations,
alongside a culture of communication,
will help if that synergy appears elusive.
An M&A does not stop when the
deal is signed, what are, in your
view, the ingredients needed in
achieving successful post merger
Integration is always a challenge and
no two deals will be the same. Theres
the inevitable insecurity in the targets
employees, and sometimes also in the
acquirers. Prepare the ground early by
planning how youre going to get buy in
from both sides.If you can,start your in-
tegration at the announcement stage
and aim to resolve issues quickly. Mas-
sive wholesale changes are best not im-
plemented immediately (unless nan-
cial performance necessitates) but in a
staged timescale.
Ask the experts
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Paul Yung
Managing director,
XAG Global, Sterling
Financial Print
Lisa Wright
Managing director,
Zephus Limited - a
BvD subsidary
Regulator shows
its teeth
The Office of Fair Tradings
Director of Mergers, Sheldon
Mills, explains the role of
regulation during the deal
making process.
The Ofce of Fair Trading (OFT) and the
Competition Commission (CC) play a vi-
tal role in ensuring M&A deals are in the
interest of consumers and competitors.
The UK has a voluntary merger control
regime which means parties can close a
transaction before receiving regulatory
clearance.However,the OFT monitor the
market closely for any deal which could
be deemed anti-competitive.
Companies should follow the OFTs
best practice guidelines. For instance,
under the terms of the Enterprise Act
2002 an investigation can be triggered
if the turnover of the target company
is more than 70m,or if the acquisition
will lead to the new enterprise having a
share of supply above 25 per cent.
The OFT scrutinises between 5 per
cent to 10 per cent of M&A deals each
year to establish if consumers might
sufer higher prices or a poorer service.
If the OFT identies the possibility of a
substantial lessening of competition,
the CC is called in or the parties involved
can ofer remedies.
The buyer,or the new entity,can ofer
to divest parts of its business to obtain
clearance. For example, Vue Entertain-
ment is acquiring Apollo Cinemas and has
agreed to divest its interest in the Apol-
lo cinemas located in four towns where
the OFT has raised competition concerns.
Where no remedies are ofered, or
where they are insufcient to address
competition concerns, the OFT refers
deals to the CC.
You want to run your deal and generate revenue, bottom-line
You dont want to spend time on paper administration or
learning how to use a new IT platform to execute your deal
You want a cost-effective and efficient due diligence process
You dont want to pay extra for the expertise you need to be able
to prepare or review documentation for due diligence
You want to attract the right parties to your sale and
provide all relevant information
You dont want buyers struggling to access the data they need, or
anything that slows down the decision-making process
You want to know who is serious about your deal
You dont want a physical data room that gives you limited intel-
ligence on who has looked at your documentation, or to add ex-
pense for potential buyers
A Merrill DataSite virtual data room (VDR) solution provides you
with answers to common problems encountered in M&A due
diligence projects to help drive deals forward.
Smarter, faster, easier due diligence for your
M&A transactions
If a system, such as a VDR, is hard to use, people get distracted
from their core business and thats frustrating, and completely un-
wanted in an M&A transaction.
Merrill DataSite VDRs are easy to set up and easy to use - made
with dealmakers in mind.
The interface and format of our VDR is familiar; replicating the
file structure of Microsoft



We provide a sample index structure for your documentation

to get the VDR started, which provides a logical structure for all
Its easy to upload electronic files yourself, or we can manage
this process for you if you dont have the time or resources
We also know things within a deal-making environment change
and while its easy for you to make amendments to your Merrill
DataSite VDR wherever you are and whenever you choose, our
multi-lingual project management team are available 24/7/365
to assist you.
Guaranteed quality of service 24/7/365 comes
with the premier virtual data room
To ensure the due diligence phase of your M&A transaction runs
smoothly, we will assign a dedicated project manager to your deal,
all included in the price. Your project manager will bring their
extensive experience to your transaction, having worked on
thousands of projects worldwide.
Your project manager will:
Help you determine exactly how best to use your virtual data
Advise how to prepare for loading data, or offer to undertake the
process for you
Deploy an experienced team that can load and index up to
50,000 hard copy pages in 72 hours, or less, (or up to 20,000
electronically pages in just 4 hours)
Work with you to define security settings, so confidential data is
always protected
Your Merrill DataSite project manager is available 24/7/365,
no matter where in the world you are located, no matter what
issue arises.
To learn more call +44 (0)845 602 6916, email, or visit
Drive Deals with
Merrill DataSite
Heres how a Merrill DataSite virtual data room
can help you drive deals
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Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd,
1 2 3 4 5
6 7
8 9
10 11 12 13
14 15
16 17 18 19
22 23
5 23
4 13
24 29
22 5
24 34
16 7
16 38
27 15
11 14
20 17
45 21
1 Primitive sh with
long jaws with
needle-like teeth (3)
3 Native to the UK (7)
6 Front legs (9)
8 Excessive, extreme
(inits) (3)
10 Artist of consummate
skill (6)
13 Character depicted in
a statue in Piccadilly
Circus, London (4)
14 Abhorrence (5)
16 Biblical twin of
Jacob (4)
17 Break through (6)
20 ___ Orbison, singer
(1936-1988) (3)
21 Mournful (9)
22 Container for coal (7)
23 Body of salt water (3)
1 Atmosphere of
depression (5)
2 Vessels made of logs
strung together (5)
3 Kept out (6)
4 Ancient Greek or
Roman warship (7)
5 Possesses (3)
7 Unbroken
mustang (6)
9 Bunch of cords
fastened at
one end (6)
11 One who travels
for pleasure (7)
12 Chest bone (3)
15 Relating to or
similar to bears (6)
18 Regions (5)
19 Dog-like nocturnal
mammal (5)
21 Suppuration (3)


7 1 3 2 3 1 2
9 4 2 1 7 5 6 8 3
5 6 9 8 4 1
5 2 1 5 4 1 3 2
9 5 5 8 7 4 9
8 7 5 3 6 2 5 9
6 8 7 4 9 6 8
7 3 2 4 1 9 1 4
8 1 2 3 9 8
9 4 3 1 2 8 7 5 6
9 8 6 3 6 1 2
The nine-letter word was
Late for a meeting with Lorraine,
Janeece leaves Cheryl unattended at
home, but when the child injures
herself it is Chalky who takes charge.
Claire Skinner, Nicola Stephenson and
Clare Higgins star in the drama
following four women related to
soldiers serving in Afghanistan.
Michael Ashcroft recalls the exploits
of George Beurling, whose heroics
during the siege of Malta helped turn
the tide of the Second World War.
The iPhone 5 is it more than a 4SS?
Weve been putting Apples
record breaking new gadget
through its paces. Steve
Dinneen gives his verdict.
Why Apple is playing the long-game with its Maps app
N APPLE user walks into a
bar. Or a church. Or a field.
Hes not really sure. Ha! A
joke at Apples expense!
Thats not something you hear
every day. If you believe the hype,
problems with Apples in-house
Maps app could be the iPhone 5s
equivalent of the antenna troubles
that dogged the launch of the
iPhone 4 (in so much as the then-
most successful launch of a
consumer product ever can be
considered to have been dogged).
Map-gate has even got its own
Downfall parody.
The good news is, unlike the
iPhone 4 problems, which were hard-
ware based (and, according to Apple,
the fault of people holding their
phones incorrectly), the Maps app
can be remotely fixed by Cupertino.
It may, of course, take some time to
get round to sorting out the rather
long list of errors, which range from
missing railway stations to entire
towns being unceremoniously
ditched in the sea.
The question many iPhone users
are asking is: For the love of God,
why? An entire generation has
become dependent on Google Maps
to find their way to the bathroom. I
have trouble locating my elbow
without first consulting my
handheld oracle. Why try to replace
one of the most successful ventures
to come out of a company with
more then a few successful ventures
under its belt?
The reason is, Google Maps is key
to the companys augmented reality
(AR) plans. And AR is about to
become very big business indeed. It
involves placing a data-layer over
what we see as reality so, point
your phone at an advert and it can
become animated, and provide an
option to click through to buy the
product (we demonstrated the first
editorial use of Aurasma AR last
year, when we set a dinosaur loose
around Nelsons Column).
Trend-spotters all seem to agree
that AR will be the next major
development in advertising, with
Googles Project Glass, which
delivers AR via a special pair of
glasses, giving ad men the world
over a quasi-sexual shudder of
delight. Suddenly, companies will
have an infinitesimally detailed
breakdown of their potential
customers, right down to how many
yards they are from their nearest
store. Imagine walking down the
street, when a sign that only you
can see flashes into your vision
offering you 20 per cent off a pair of
trainers. If youre interested, a map
could appear leading you straight to
the door.
At the heart of this technology is
geo-location, which, if it going to be
useful to consumers, needs to be
pegged to a map. So, while Apples
Maps app may be experiencing
some teething problems, forcing its
way into the space now, while there
is still a fighting chance of catching
up with Google, makes very good
business sense.
Regardless, the issues with Maps
doesnt seem to be putting any
iPhone customers off, with yet
another round of record-breaking
sales. There are now more iPhones
on pre-order than there are stars in
the night sky, and all this despite
the somewhat muted critical
response. Regular readers may
remember my first impression of
the iPhone 5 was that it should have
been called the 4SS: sure, its a bit
bigger, and a bit faster but it hardly
reinvents the wheel.
But, like a charming friend who
always manages to persuade you to
lend him a tenner, Ive been won
over. You really have to spend some
time with the iPhone 5 to
appreciate it. Treat it nice, watch a
movie with it, buy it some apps.
After less than a week, the thought
of switching back to the 4S makes
me want to projectile vomit my
spleen. If the biggest problem with
the hottest consumer device ever
created is a slightly rushed maps
app, then things could be far worse.
Spare a thought for poor old
Blackberry, the former belle of the
ball. While Apple was breaking
records last week, Blackberry users
couldnt even check their emails.
Gone is the 30-pin connector,
replaced by a tiny slip of a
thing just 1cm across. It may
be a bit of a pain if you have
to buy an adaptor for your
speaker dock but its one of
those things that makes you
think, What took them so
long?. Definitely an
The iPhone 4 is a design classic: all glass and
aluminium. The 5 doesnt fall too far from the tree
but is an improvement nonetheless. The
glass has mostly gone from the rear,
replaced with... you guessed it...
brushed aluminium. Small glass
strips remain along the top
and bottom for antenna
purposes and the whole
thing feels remarkably well
put together. Tapered edges
on the aluminium bevel is a
nice touch. It really is a work
of engineering genius.
OK, so this is technically an
iOS 6 issue, rather than an
iPhone 5 one, but the
launch of Maps, complete
with reimagined global
geography, was rather
embarrassing for Apple. Im a
bit disappointed I havent
spotted any errors myself. This is
the one aspect of the launch thats a
bit of a damp squib. Mapping the entire
world aint easy, it seems.
One of the biggest selling points for the iPhone 5
is its 4G technology, which will make mobile
browsing far, far quicker. Unfortunately, it hasnt
been switched on yet in the UK. Tthe newly
rebranded EE (formerly Everything
Everywhere), plans to launch the first 4G network
in London within weeks. If youre on another
network, you face a wait until the new year, when
the government auctions off a new chunk of
mobile spectrum.
The new A6 chip in the iPhone 5 is supposed to be
twice as fast as the 4S, which was already pretty
quick. In our tests, the 5 had the edge but the
difference was marginal. Opening web pages, was
slightly quicker, as was loading apps, but were
only talking about half a second. Having said that,
those half seconds all add up over the course of a
year. The real difference will be in the ability to
render graphics in next-generation games.
Size and weight
On appearances alone, the
iPhone 5 looks like a marginal
improvement on the 4S. When
you hold them both in your hand,
though, the 4S instantly starts to
look dated. The height difference,
which takes the 5 to almost 16:9
aspect ratio, feels like a natural
progression. The weight
difference is stark the 5 feels
incredibly nimble. In a blind test,
you can quite easily tell which
phone is in your pocket without
having to touch it.
iPhone 4
iPhone 5
ENGLAND Twenty20 captain Stuart
Broad believes his sides batsmen
will be ready to deliver in todays ICC
match against West Indies.
They suffered against Indias spin
bowling throughout Sundays
90-run defeat against India but in
Pallekele today he believes that that
is set to change.
Its all mental, Broad said. It is
important to get back into the nets
and start feeling like hitting the
ball again.
It is all a mental state of mind,
getting back in a positive frame of
mind and reminding [ourselves] that
we are good players who have
performed consistently.
We have match-winners in our
side, and it is certainly not one to
worry or panic about. If you are
going to have a blip, do it in the
game that doesnt matter.
Going into this game there is no
feeling of there being nothing on
this one.
Against India, as much as we
tried to get away from it, there was
the sense that whatever the result
it didnt change what we did.
It is important to get a good start
in the Super Eights, because the
games come thick and fast.
We just talked about our
strengths learn from the mistakes
you make, but dont dwell on them.
Broad backs
batsmen vs
West Indies
FAs Terry hearing continues
nFOOTBALL: The Football
Associations disciplinary hearing into
John Terrys role in the Anton
Ferdinand race row is to continue
today, though it could be concluded.
Despite missing training, Chelsea will
consider him for selection against
Arsenal on Saturday.
Mayweather ends Pacquiao feud
nBOXING: The lawsuit filed by Manny
Pacquiao against Floyd Mayweather
has now been settled, with
Mayweather apologising, leading to
renewed hope that the two could yet
reach an agreement to fight.
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Colsaerts believes
he can be an
essential weapon
for his team as they
attempt to retain
the Ryder Cup at
Medinah Country
Club near Chicago.
The Belgian is the
only rookie in
captain Jose Maria
Olazabals side and
that he was even in
contention for
selection highlights
how far he has
come in three years
after previously
being ranked
1,305th in the
world. This is quite
an achievement,
the 29-year-said.
When you look
back and you see
where I was three
years ago, Im just
the perfect example
that if you want
something really
bad and you put
your work into it, if
youve got the
heart and the
passion, anything is
achievable. Its
funny, because I
thought about it,
its almost like I feel
like Ive come back
from the dead,
which is a bit of a
HE Ryder Cup begins in Chicago
tomorrow and I have to say that
though I still fancy Europe to
win and I have done for some
time this is the time when all
of the advantages given to the
home team, this year the USA, means
that theres everything to
play for.
These are the most evenly-
matched sides Ive seen for a while,
but Europe are slight favourites. The
atmosphere is going to be huge for
the Americans but I must say that,
when it was me playing, I found it
easier to play away from home.
Theres greater expectancy on you
at home which you dont feel as
much when youre away. And I
found that when youre in the away
team, you can use the noise of the
crowd to get into your zone. When
a crowds shouting for you its very
easy to get distracted but when
theyre shouting to the Americans
you can really get yourself fired up
and try to shut them up by winning
the holes.
You actually want to be
intimidated and you want to be
angry because that can help. To my
mind, there are no negatives with
such an atmosphere, and therein lies
another interesting element: how
the Americans handle the home
atmosphere. The crowds can turn
very quickly if things are going
wrong for them.
I think there are some fantastic
pairings for Europe. Any two from
Rory McIlroy, Graeme McDowell, Ian
Poulter, Justin Rose, Lee Westwood,
Luke Donald and Sergio Garcia and
would be fantastic. They largely have
a good history together. For America,
Phil Mickelson and Tiger Woods
would be a particularly great
pair, and one I would like to see
in practice.
Ive spoken to many of the players
involved and I have to say that
theyre all in great form. Theyre all
enjoying themselves because its a
tournament they all adore, so they
cant wait for Friday to come around.
None of them will tell you that
theyre confident but you can
certainly see it in them. There are no
nerves at this stage but, of course,
you wouldnt see them until
tomorrow anyway.
Europes captain, Jose Maria
Olazabal, this week compared
McIlroy to a prime Woods and thats
something I also can see, hes been
in fantastic form. Woods has said
that if they can beat McIlroy then
Europe will fold but hes wrong; I
dont know why USA dont learn
their lesson. This is not about one
player, this is about 12 men the
Americans still havent got it right.
Woods has also spoken of how he
feels largely responsible for the USs
recent poor Ryder Cup record, but
you cant do that, you cant think of
only one man.
There are a lot of observers who
would like to see McIlroy and Woods
go head to head, and Im among
them, Id love that to happen. I
honestly think hed beat Woods, too.
Olazabals decision to feature Seve
Ballesteros on all of Europes team
bags, by the way, was excellent. Its
great that he can still be around.

Tiger Woods
Has showed a lot of form
this year but has also
failed in quite a few
Majors. Alway up for it.
Bubba Watson
Watson was this years
Masters champion but it
has to be said that his
forms not been great.
Brandt Snedeker
Won four times on tour,
always seems on top
form. A great pick for the
USA team.
Steve Stricker
One of the best putters in
the game but hes 45, so
his age could be
interesting this week.
Phil Mickelson
One of the strongest
Americans, though his
records not great. Great
player, but beatable.
Webb Simpson
This years US Open
champion. Hes a rookie,
so itll be interesting to
see how he handles that.
Zach Johnson
A Masters champion. One
three, lost three, and tied
one in his time at the
Ryder Cup.
Matt Kuchar
A very good player one
of Americas steadiest.
Hes going to be tough to
beat. Good putter, too.
Jim Furyk
He doesnt have a great
record but he won the US
Open in 2003. Hes a
tough competitor.
Dustin Johnson
One of the longest hitters
in both the game and the
USAs team, hes up there
with Colsaerts.
Keegan Bradley
Won the 2011 US PGA
Championship so is a
Major winner. Golf genes
run in his family.
Jason Dufner
One of the new kids on
the block. I love his style
and want to see how he
handles the atmosphere.
Rory McIlroy
Two-time Major winner
and the world No1
Rorys the best player on
our team.
Lee Westwood
A Ryder Cup stalwart
whos playing great and
been doing a lot of work
on his short game.
Justin Rose
Justins in top form and
was the runner up last
week in the FedEx cup,
hes playing great.
Ian Poulter
No one has more fire or
desire to win. Ians a great
man to have on your side
in any format.
Francesco Molinari
A great foursomes player
and one of the straightest
hitters out there. Weak on
the greens, though.
Graeme McDowell
A Major winner who has
Ryder Cup experience
Im glad that hes on
our side.
Paul Lawrie
This is Pauls first time
back in 13 years but hes in
the best form of his life.
Cant wait to watch him.
Martin Kaymer
Martins a bit off form
but he showed some
improvement last week
finishing fifth in Holland.
Sergio Garcia
One of Europes best
ever players, its great to
have him back. Hes a
great asset.
Peter Hanson
Won the Ryder Cup with
the last time and played
his way back this year. Not
scared of anyone.
Luke Donald
One of the worlds top
players who lives in
Chicago could get us
some home support.
Nicolas Colsaerts
One of the top three
longest hitters in the
world. A rookie, but he
definitely has talent.
VE seen the Ryder Cup course
at Medinah Country Club, near
Chicago, and its clear that
USAs captain Davis Love has
tried to set it up to suit them, and I
believe hes made a big error in
doing that.
Hes cut away all of the rough on
the course and that, to me, doesnt
suit either America or Europe, it
just makes it an easier game. Thats
fine if you want to be more aggres-
sive, but the mistake is cutting
away the rough around the greens.
This is something weve done for 20
years to suit the Europeans and
now hes done it at the Medinah.
The Americans are more suited to
the rough because they typically
play it week in, week out.
The course is fantastic from what
I can see, its a really good test of golf
for all of those players because anyone
could struggle on it. Ultimately, howev-
er, you only have to beat the player
youre facing and should concentrate
on that; its not a tournament where
you have to shoot in the sixties.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media commentator.
He famously sank the putt that clinched victo-
ry for Europe in 1985. A player on the team
on eight occasions, winning four times, he
also captained the side to victory in 2002.
Follow him on Twitter @torrancesam
Love has tried to change the course
to suit America, but it wont help
Europe can take
advantage of the
USAs home crowd
Medinah Country
Club is staging this
years Ryder Cup
MANCHESTER City defender Kolo
Toure has admitted his sides
defensive vulnerabilities will
threaten their hopes of success if
they cannot be eradicated.
Toure on Tuesday night played
for City when they twice led at
home to Aston Villa in the Capital
One Cup before conceding a total
of four goals when succumbing to
a 4-2 defeat. The Premier League
champions are yet to keep a clean
sheet this season and in eight
fixtures have conceded 16 times in
an ultimately relatively
uninspiring start.
It was a disappointing night,
said Toure, the clubs former
captain who arrived from Arsenal
for 16m in 2009. The team didnt
play well. We conceded four goals,
which is not good, and we gave
some cheap goals to Villa as well.
It concerns us because a team
like Man City cannot expect to
concede four goals at home.
Since the season started we
have not had a clean sheet and
that is very important when you
want to be a top club, you have to
defend better as a team.
As a defender and as a group
we have to work on it because
mistakes were done by a few
players and when you win it is
everybody so when you lose it
is everybody.
Toure tells City
they need to
tighten up
ARSENAL manager Arsene Wenger
last night lauded the amazing
performance of winger Theo Walcott
but regardless refused to reveal if he
would get his desired run up front.
The home side had already
secured victory over Coventry when
the England international scored the
first of his two goals with 16 minutes
to go but despite encouraging the 23-
year-old to sign an extension to the
countract that expires at the seasons
end, the Frenchman was reluctant to
commit to a permant change.
Hes a great finisher now and in
front of goal he is amazing, said
Wenger, for whom Olivier Giroud,
Alex Oxlade-Chamberlain, Andrey
Arshavin and Ignasi Miquel had also
scored. Im not against it.
Well try but at the moment
theres big competition. The team is
doing well and his time will come.
We have to be patient.
We want him to stay so lets see.
Lets sign him and extend him. Its
part of every professional situation. I
speak to Theo of course, to his
agents, we are always in touch.
It was in everybody's mind that
the sooner he [Giroud] gets [his first
goal] the better. It was in his mind
more than our mind. Thats positive.
Wenger: Walcott must wait
It was a good finish. Hes a good fin-
isher. I believe he is looking for confi-
dence and that goal will help him.
It was Callum Ball who scored
Coventrys consolation goal with the
score at 4-0 with 12 minutes to go but
for Giroud, who scored his first goal
for the club, the occasion could have
been even greater but for his missing
of a penalty. While waiting to take his
kick two fans ran onto the pitch in
only underwear to delay the resump-
ton of play and when eventually
taken the effort was saved by goal-
keeper Joe Murphy.
At 1-0, Oxlade-Chamberlain gave
Arsenal full control when scoring
from a total of 25 yards and
Arshavins soon followed with a simi-
lar level of style when chesting the
ball and scoring six minutes later.
Two from Walcott and Miquels late
finish would follow, with an away
trip to Reading the ultimate reward.
Arsenals Theo Walcott, who scored twice last night, wants to be used as a striker if he is to extend his stay at the Emirates Stadium
Nuri Sahin secured Liverpools two goals
ON-LOAN Real Madrid midfielder
Nuri Sahin scored twice to inspire
Liverpools first domestic win of the
2012/2013 season.
New manager Brendan Rodgers
had looked to be heading for another
defeat when Gabriel Tamass shot
gave West Brom a third-minute lead
after goalkeeper Brad Jones dropped
a free-kick, but Sahin equalised in
the 17th minute before scoring the
winner eight minutes from time.
Rodgers said: It was an
outstanding performance. Im not
surprised as our performance level
has been good all season. Its great to
see the kids playing with confidence.
We fully deserved the win.
COVENTRY ..................................1
Sahin saves holders Liverpools cup hopes
MANCHESTER United defeated a
resilient Newcastle to advance to a
fourth-round Capital One Cup tie
away to Chelsea.
Goals from midfielders Anderson
a minute before half-time and
Tom Cleverley in the 58th minute
had given United a two-goal lead
before visiting striker Papiss Cisse
scored with a header to give his side
hope with half an hour to go.
Im very pleased, said United
manager Sir Alex Ferguson, for
whom returning forward Wayne
Rooney played the first 76 minutes.
First to win the tie in an all Premier
League clash. We played fantastic
football and I think we deserved it.
Ferguson pleased with United victory
Read Sam Torrances
exclusive Ryder Cup lowdown
Golf: Page 35
WEST BROM................................1
MANCHESTER UNITED................2